Posts Tagged ‘tax cuts’

Donald Trump After one Year With Davos Up Next

January 19, 2018

Much of the attention on US President Trump focuses on what he says and tweets. But in his first year in office he has already had a significant impact on key issues affecting people in the US and around the world.

Donald Trump (Reuters/A.P. Bernstein)

International Trade

Donald Trump has made it repeatedly clear that he prefers bilateral trade agreements over multilateral ones. Since he took office, the US President has stopped the United States’ participation in negotiations over a Trans-Pacific Partnership (TPP) and put negotiations over a free trade deal between the US and the European Union (TTIP) on hold. In addition, he threatened to cancel the North American Free Trade Agreement (NAFTA), forcing Mexico and Canada to re-negotiate the terms of the agreement. Meanwhile, America’s competitors are continuing their efforts to reduce trade barriers between them: The European-Canadian free trade agreement CETA went into effect in 2017, and 11 countries on both sides of the Pacific are continuing their efforts to establish a Trans-Pacific Partnership agreement without the US. Although China is not part of the TPP negotiations, Trump’s critics fear that the US withdrawal will further strengthen China’s influence on commerce in Asia and the Pacific region.

Trump signing an orderTrump signed an executive order withdrawing the US from the TPP

Read moreOpinion: Donald Trump’s policies have fed China’s rise as world power

Business and Finance

Donald Trump’s first year in office was a good year for shareholders and other investors in the stock market: The Dow Jones Industrial Index rose from 18,589 points on the day after Trump’s election to more than 25,800 in mid-January. Compared to that, the Dow rose only moderately in President Obama’s first year in office (in the middle of the global financial crisis), but Obama also saw the Dow more than double over his full eight years in office: from just over 9,000 to more than 18,000. Also, under Trump the unemployment rate decreased from 4.8 percent a year ago to 4.1 percent today (when Obama took over from George W. Bush though, the unemployment rate was at around 8 percent).

Trump’s biggest legislative achievement, a tax reform signed into law at the end of December, reduces the corporate tax rate from 35 to 21 percent, and reduces income taxes for individual citizens across the board while doubling standard deductions. By far the biggest share of those cuts, however, benefits companies and high earners: Taxpayers earning more than $700,000 (€574,000) a year, who make up 1 percent of all taxpayers, will receive 20 percent of the total tax cut. And while the tax cuts for businesses are permanent, the reductions for individual taxpayers will expire after 10 years. The tax cuts are financed on credit, leading to an increase in the federal budget deficit of about $1 trillion over the next 10 years, according to the non-partisan Joint Committee on Taxation.

Health and Social Security

Trump and the Republicans in Congress failed to repeal and replace the Affordable Care Act (ACA), also known as Obamacare, the signature bill of Trump‘s predecessor in the White House. But in the 2017 tax reform, they did manage to repeal the “individual mandate,” a provision that demands that every American has to have health insurance, or otherwise pay a penalty. Without the Individual Mandate, less young and healthy Americans will be inclined to buy health insurance, leading to higher premiums for everybody else. The bipartisan Congressional Budget Office estimates that, as a result, the number of uninsured Americans could increase by up to 13 million. Meanwhile, leading Republicans in Congress — including House Speaker Paul Ryan — are advocating reductions on future spending on social security and other so-called entitlement programs — partly to offset the increase in the federal budget deficit caused by the 2017 tax reform.

Public discourse/Newspeak

Book presentation Fire and Fury: Inside the Trump White House Trump has left his mark on public discourse

What Donald Trump has done to public discourse is best summed up by stating that since his taking office it is generally no longer advisable to quote the president of the United States in the presence of children. Just in time for the first anniversary of his inauguration, Trump made sure to remind people, when he described Haiti and African nations as“s***hole countries,” something he later denied.

But it is not just the fact that the president has coarsened public discourse and routinely utters falsehoods at a staggering pace, (according to the Washington Post, who tracks his remarks, he made more than 2,000 false or misleading claims since taking office) with one of his earliest erroneous claims concerning the crowd size following immediately after his inauguration.

 Trump’s war against fake news

At least as disconcerting is the fact that the Trump administration has apparently shunned various words and phrases from public websites. According to a new report from the EDGI (Environmental Data and Governance Initiative), an international group of researchers, “climate” is a key word that has been rephrased or scrubbed from Trump administration websites, especially from the pages of the Environmental Protection Agency (EPA). While the scrubbing of words like “climate” from government websites has been confirmed, media reports that other agencies like the Centers for Disease Control (CDC) have banned the usage of certain words have been denied by officials.

Shrinking the government

Under Trump the size of the federal workforce has been shrinking. At the end of September, according to official data, the US government had 16,000 fewer permanent employees than at the end of 2016.

Beyond reducing the number of permanent employees the Trump administration has also still not filled many key governmental positions. In fact, according to the nonpartisan Partnership for Public Service which tracks the confirmation process, the Trump administration has still not filled 245 of 633 key positions that require Senate confirmation, among them such important posts as that of ambassador to South Korea.

Appointment of judges

Probably one of the most lasting impacts — and certainly most irreversible since it is a lifetime position — of the Trump presidency is his appointment of Neil Gorsuch to the Supreme Court. At 50, which is young for a Supreme Court judge, the conservative Gorsuch will likely remain at and shape the highest court for years to come. But Trump’s success at appointing conservative judges to the bench extends beyond the Supreme Court. Trump has also managed to get 19 additional top level judges confirmed by the Senate, among them a record number of 12 circuit court judges, which will likely leave their judicial imprint on the country for decades to come.

Foreign policy

While Trump continues to criticize NATO member states for not contributing enough, he has upped the money and American personnel dedicated to defend the alliance’s Eastern flank. Beyond Europe, Trump has engaged in what is widely viewed as a dangerous name-calling game with North Korea’s leader regarding the country’s rapidly advancing nuclear weapons program and Pyongyang’s aggressive behavior. By recognizing Jerusalem as Israel’s capital as well as charting a tougher course vis-à-vis Cuba and the Iran nuclear deal, Trump has reversed decades of US foreign policy on the former and his predecessor’s stance on the latter issues. Generally though, many observers find that the Trump administration led by a president who is deeply unpopular in many parts of the world, still lacks a coherent foreign policy strategy.

Read moreDonald Trump’s presidency: Taking stock and looking ahead


Protests against Trump's DACA plansTrump’s immigration policy has sparked protests across the country

With the number of illegal border crossings down by 40 percent at the US-Mexican border last year according to official figures and an ongoing crackdown on undocumented immigrants by the Trump administration, immigration is one of the issues where the president has had a deep impact affecting tens of thousands of people in the US and around the world. While Trump’s travel ban against several countries is still tied up in the courts, the administration has signaled it will end the protected status that allows more than 200,000 people from El Salvador, Haiti and Nicaragua to remain in the United States. Trump has also ended the DACA program and repeatedly hammered the diversity lottery program that enables some 50,000 people from various countries to come to the US per year and wants to end it. And even though illegal border crossings have already dropped significantly, Trump still wants to fulfill his promise to build a wall along the US-Mexican border.


One of Donald Trump’s first decisions as President was to name Scott Pruitt as head of the Environmental Protection Agency (EPA). A very controversial choice, as Pruitt is an outspoken climate-change skeptic who believes that the authority of the agency he now leads should be drastically reduced. As attorney-general in Oklahoma, he repeatedly sued the EPA. Since taking office, Pruitt loosened regulations designed to reduce pollution from coal and gas power plants, vehicle emissions, mining, landfills and oil and gas drilling. A new and controversial proposal by the EPA would also allow offshore drilling along most coastlines of the US. In addition, the Trump administration has given the Green Light to controversial projects such as the Keystone XL oil pipeline, oil drilling in the Arctic National Wildlife Refuge in Alaska and a review of the size of dozens of protected areas throughout the country; Last, but certainly not least, Trump also pulled the US out of the Paris climate change agreement.

USA Nebraska Keystone Pipeline By giving the green light for the Keystone Pipeline Trump reversed his predecessor’s stance

Consumer Protection

Reducing regulations for businesses is one of the main themes of the Trump administration not only with regard to the environment, but also when it comes to consumer protection. In a move mirroring Trump’s approach towards the EPA, he appointed Mick Mulvaney, a fierce critic of the powerful Consumer Financial Protection Bureau, as its new (temporary) director. The bureau, or CFPB, was established in the wake of the 2008 financial crisis to protect consumers against malpractice from banks and other financial service providers. Meanwhile, the Federal Communications Commission, led by Trump-appointee Ajit Pai, scrapped the so-called net neutrality regulations that prohibited broadband providers from blocking websites or charging for higher-quality service or certain content. Pai argues that less regulation will increase competition, thus lowering prices for consumers and fueling innovation. But critics fear that broadband providers could favor big companies which can afford to pay for high-speed internet and better access for their products, while small businesses and start-ups would be disadvantaged, giving costumers less choice.

For Businesses, Donald Trump’s First Year Is a Net Success

January 16, 2018

CEOs’ relationship with the president had some tense moments, but most corporate chiefs welcomed the big corporate tax cut and push to ease regulations

WASHINGTON—The tax overhaul that President Donald Trump signed into law last month capped a year in which his initiatives on taxes, regulation—and many of his public pronouncements on the economy—have been broadly welcomed by business.

It hasn’t all been smooth sailing for the president most closely aligned with business interests in decades: he was roundly criticized for his remarks about a deadly white supremacists’ rally in Charlottesville, Va., last August. After that, several CEOs resigned in protest from his business advisory councils, although administration officials say they had largely fizzled out by then.

In pure policy terms, however, business groups and executives say the $1.5 trillion of corporate-focused tax changes and the bevy of completed and proposed rule changes aimed at cutting regulatory burdens on business have made 2017 a net success for business.

“If Hillary [Clinton] had been elected, we would have had more regulation and higher taxes,” said Byron Wien, an executive at Blackstone Group L.P . , on a recent investor call. “Trump was elected; we have less regulation and lower taxes.”


  • Stock Market Roared During Donald Trump’s First Year, Boosted by Earnings and Tax Cut

Heading into his second year, the president faces some significant decisions that could create tension with business on issues executives care about, such as trade, immigration and health care.

Some of this was captured by Chamber of Commerce President Tom Donohue last week in his annual address on the state of business. He urged the president not to pull out of the North American Free Trade Agreement, to preserve temporary residency for some 200,000 workers the administration wants to deport and to avoid a confrontation with North Korea. Mr. Donohue also offered support to embattled tech firms who have come under new scrutiny in the past year.

Image result for Chamber of Commerce President Tom Donohue, photos

Chamber of Commerce President Tom Donohue

Trade presents some particularly difficult decisions. Nafta, and the president’s threat to pull the U.S. out of it, remains a concern both for U.S. companies that have grown up around the free trade it brought to the continent, and farmers who have taken advantage of markets in Mexico and Canada that the pact has opened for their exports.

China brings its own set of challenges. Many multinational companies and ardent free-traders have grown frustrated, along with Mr. Trump, with what they see as Beijing’s backsliding on market-opening promises in recent years. Even many officials from the previous Obama administration now say they should have steered a harder line on Chinese trade practices, while many business groups share Mr. Trump’s criticisms of China.

Still, the companies are nervous about how his administration will ramp up pressure on Beijing. While American executives generally still favor intensified negotiations over trade sanctions, they worry that Trump aides will deploy tariffs, quotas and investment limits that could prompt swift retaliation, triggering a costly trade war.

In October, the U.S. Trade Representative’s office held a public hearing seeking business input for a continuing probe into widespread complaints about China forcing U.S. companies to turn over intellectual property. While many witnesses confirmed the problems and said they supported the Trump administration probe, they warned against overreach.

Erin Ennis, a top official at the U.S.-China Business Council, cautioned against “simply seeking to impose penalties or to restrict trade which could have the effect of inhibiting commercial cooperation that benefits U.S. companies and U.S. citizens.”

Image result for china's new airliner, photos

China’s new air liner — C919

Business leaders are also eager for the Trump administration to make good on a push to refurbish the nation’s infrastructure, which has raised expectations for companies across the economy, especially in heavy machinery and construction services. But an almost certain fight looms over how to pay for it, conspiring with election-year pressures to make it that much more difficult.

Other promises from the administration and allies in Congress—like an effort to rein in entitlement programs—are viewed with even more skepticism as the time before midterm congressional elections dwindles.

“Mark my words, there is no way in hell that they are that dumb to take up Medicare or Social Security in the election year,” said Tommy Thompson, the former Republican governor of Wisconsin and a board member of Centene Corp. , which administers some health programs, at a presentation for investors. “It would be tantamount to saying, ‘We don’t want to govern anymore.’”

Mr. Thompson said a bipartisan infrastructure bill could have a chance of passage, and an attempt to dig into more divisive issues, such as Social Security and Medicare, could come in 2019.

While executives have praised Mr. Trump’s efforts to slash rules—especially those put in place by his predecessor, Barack Obama —many of them could end up in court, to be fought all over again. That includes the Federal Communications Commission’s December action dismantling Obama-era “net neutrality” rules that required internet-service providers to treat all traffic on their networks the same. Another is Mr. Trump’s reversal of his predecessor’s “clean power plan,” along with a number of other energy and environment rules.

For some executives, life under Mr. Trump has sometimes meant reassuring investors that their companies aren’t his targets—a reference to both his policies and his actions during the presidential campaign, when he singled out companies such as United Technologies Corp. and Lockheed Martin Inc. for criticism.

On an investor call earlier this month, the chief executive of Lakeland Industries Inc., a New York-based maker of protective clothing and work gear, sought to reassure analysts that the Trump administration’s efforts to curb trade deals were aimed at changes in the automotive industry, and wouldn’t hurt Lakeland’s business.

“The apparel business,” CEO Christopher Ryan said, “is not what Mr. Trump is trying to change.”

Business advocates are hoping to channel the administration’s energies in the coming year, as Mr. Trump hopes to pivot to infrastructure and entitlement changes.

“Business is determined to be a voice of reason and a bridge between sides,” Mr. Donohue said. “We’re determined to help, and when necessary, correct our government as it does the nation’s business.”

—Jacob M. Schlesinger contributed to this article.

Write to Ted Mann at

With Fireworks, Washington Returns to the Core Trump Agenda

January 15, 2018

President’s focus on immigration, trade and infrastructure is in line with his base—just as election year gets going

President Donald Trump spoke to reporters at Trump International Golf Club in West Palm Beach on Jan. 14, 2018.
President Donald Trump spoke to reporters at Trump International Golf Club in West Palm Beach on Jan. 14, 2018. PHOTO: NICHOLAS KAMM/AGENCE FRANCE-PRESSE/GETTY IMAGES

If there were three signature Donald Trump issues during the 2016 presidential campaign—ones he stressed repeatedly at rallies and in debates—they were immigration, trade and infrastructure.

And so far the Trump emphasis this year is on…immigration, trade and infrastructure.

That represents a significant turn in the Washington agenda for 2018, one little-noticed amid the controversy over the alleged presidential remark disparaging immigration from “shithole” countries. After a year focused more on tax cuts, health care and deregulation—issues that tend to appeal more to traditional Republicans—the focus so far this year has moved decisively back to standard Trump issues.

That shift has the potential to help shore up and energize the Trump base in time for this year’s crucial elections for control of Congress. It also presents an opportunity to look back at the condition of that Trump base after one year—as well as why people voted for President Trump in the first place, a question that has become clouded by mythology.

First, a look at that Trump base. A dive into Wall Street Journal/NBC News polling suggests that, after Mr. Trump’s tumultuous first year in office, the president’s support among his staunchest proponents has eroded some, though still is pretty solid. Among whites without a college degree—a core Trump support group—approval of the job he is doing as president slipped to 55% in December from 59% in February. Disapproval has risen to 41% from 32%.

Similarly, the share of whites without a college degree who have a negative image of Mr. Trump personally has risen to 40% from 33%.

Those still are pretty solid numbers, and significantly better than those the president gets among other Americans. Among whites with a college education, for example, almost six in 10 disapprove of the job he is doing and hold a negative view of him personally.

In short, the base is still the base, though it has eroded around the edges.

So a return to the signature Trump issues would seem to be a way to end and perhaps reverse that erosion at the base. And it probably does. But here, there also are some surprises.

There is no doubt that immigration already has moved to the top of the Washington agenda in 2018. Mr. Trump is locked in either negotiations or a fight—and it’s hard to know from day to day which it is—with Democrats over the fate of “Dreamer” immigrants who came here illegally as children, over paying for a wall along the Mexican border and over broader immigration reform.

Given how much Mr. Trump talked about immigration and a wall during the campaign, this turn isn’t surprising. What is surprising is how low immigration and the wall ranked on the list of reasons his supports actually voted for him.

When his voters were asked last December, shortly after the election, why they backed Mr. Trump, just 20% said taking a tough approach on immigration and the wall was the most important reason. More than twice as many said simply improving the economy overall was most important.

Similarly, in polling around the time Mr. Trump was inaugurated in January, just 31% of whites without a college degree—again, a strong Trump constituency—said building a wall was an absolute priority.

Trade and infrastructure improvements, by contrast, ranked far higher as a matter of concern. Among those same white noncollege Americans, 65% said imposing tariffs against countries that take advantage of trade agreements was a top priority, and the same share cited improving infrastructure.

So there is little doubt he’s speaking to his people on trade, a subject about to start rising in visibility. The administration is approaching decisions on imposing tariffs on imported steel and aluminum, on steps to slow imports of solar panels and washing machines, and on penalties against China for seizing American intellectual property. And talks to renegotiate the North American Free Trade Agreement are reaching a critical juncture.

Similarly, the White House is promising action soon on infrastructure, an issue Mr. Trump has started bringing up with more regularity.

Of course, much of Mr. Trump’s campaign appeal was based not on specific policy positions, but more on his pugilistic attitude—and the simple fact he wasn’t Hillary Clinton, an object of hatred for many Trump voters. More than four in 10 Trump voters said making sure she didn’t become president was the top reason they voted for him.

Still, the evidence suggests that Mr. Trump is speaking directly to his base with his 2018 emphasis on trade and infrastructure—but also expending a lot of capital and earning a lot of enmity at home and abroad on immigration and building a wall, subjects not as central for his supporters as commonly supposed.

Write to Gerald F. Seib at

Understanding the Trump Show

December 27, 2017

After tax reform, we might have to rethink how America gets things done.

President Trump sits next to the tax-reform bill after signing it into law in the Oval Office, Dec. 22.
President Trump sits next to the tax-reform bill after signing it into law in the Oval Office, Dec. 22. PHOTO: MIKE THEILER/BLOOMBERG NEWS

For this viewer, the meaning of the Trump show began to change with last week’s tax bill. Donald Trump normalizes nothing new and outré in our politics after all. He is but an effective parody of the politicians we have, and have long had.

We are also learning something about the relationship, in our age, between the political show and movement, however fitful, on the nation’s business.

Republicans’ performance at last week’s White House in celebration of the party-line tax bill may have been bombastic and obsequious, but the party placed its bet on a growing economy. The show, however odd, exploited the party’s star attraction, Mr. Trump, whom the cable channels can’t resist, to push out the message to America “good things are happening.”

Every bit as hysterical, excessive and embarrassing was the countershow put on by Democrats. But they put themselves on the side of bad things happening. Nancy Pelosi, Chuck Schumer and their junior shadows danced around the maypole, lighted candles, burned effigies—in hope that you will lose your job in 2018, see your hours cut, or fail to get an expected raise.

This probably is an ill-advised bet by Democrats. The world’s major economies are in a synchronized upswing. The world’s central banks are using the window to withdraw their histrionic and destabilizing monetary accommodations of the past decade. To the extent that “it’s the economy, stupid” still trumps, the GOP will benefit.

Democratic economists are reworking their “secular stagnation” models to say the Trump program is leading not to faster growth but higher inflation. They are likely to be disappointed. The Trump economy—which we’ve maintained since before Election Day is the economy you get when you take President Obama’s foot off its neck—seems predisposed to remain benign through next year’s congressional election.

Republicans and Democrats, including Barack Obama, have long said our corporate tax system was dysfunctional and needed to be fixed. The rest of the tax bill may be anticlimactic, but it broadens the standard deduction, cuts rates a bit, and slightly reduces itemized deductions, those corrupt and corrupting schemes by which Washington rewards you for redirecting your income to various lobbying interests (including state and local government).

From the Trump show we are getting steps in the direction of “good government” as that term has traditionally and reliably been understood for decades. And unless 250 years of economic thought is ready to be junked, increasing the after-tax return on business investment will lead to more investment.

How different would a Democratic party-line tax bill have been? Probably not much different on the corporate side, unless you think the difference between 21% and 28% is vast and telling. On the personal side, Democrats would likely have focused on trimming back different deductions (for the rich!), but would likely have made it up to voters with a larger standard deduction and lower rates just as Republicans did.

It took three Reagan tax bills and five years before we got the bipartisan 1986 tax reform. If that history is borne out a second time, then last week’s victory will be a down payment on better things to come. This could be another way the Trump show, if it creates successes that both parties eventually want to own, teaches us something mysterious about what is required to move our country ahead now.

Incentives matter, and in this business of incentives not all is coming up roses, however.

The Harvey Weinstein phenomenon, we submit, is really a Trump phenomenon. The country has seen sex-abuse scandals before. It was the spectacle of Mr. Trump’s election that turned blue-state America, from which most of the recent scandals stem, toward genuine repentance and then toward indiscriminate intolerance of male sexual aggression in any form.

Unfortunately, when we stipulate that all accusations must be believed, we guarantee not only the lodging of more allegations, but more false allegations. A few months ago Mike Pence was mocked for his practice of never meeting or dining alone with a woman who is not his wife. Now every man in blue America will have to adopt such a policy as insurance against a malicious allegation.

But one thing has come into focus. At the beginning of 2017, it was impossible to figure out how the Hulu production of “The Handmaid’s Tale,” about a dystopian future in which consensual, nonprocreative sex is all but outlawed, became in the minds of so many liberal commentators symbolic of the age of Trump. Now it starts to make sense.

The ‘Stupidity’ of Donald Trump — Calling or even thinking someone else stupid is virtually guaranteed to give them the last laugh.

December 26, 2017

He’s had far more success than Arnold Schwarzenegger or Jesse Ventura.

President Trump departing from the White House, Dec. 22.
President Trump departing from the White House, Dec. 22. PHOTO: JONATHAN ERNST/REUTERS

This time one year ago, the assumption dominating political coverage was that the only people more stupid than Donald Trump were the deplorables who elected him.

Since then, of course, President-elect Trump has become President Trump. Over his 11 months in office, he has put Neil Gorsuch on the Supreme Court and four times as many judges on the appellate courts as Barack Obama did his first year; recognized Jerusalem as the capital of Israel; withdrawn from the Paris climate accord; adopted a more resolute policy on Afghanistan than the one he’d campaigned on; rolled back the mandate forcing Catholic nuns, among others, to provide employees with contraception and abortifacients; signed legislation to open up drilling for oil in the Arctic National Wildlife Refuge; initiated a bold, deregulatory assault on the administrative state—and topped it all off with the first major overhaul of the tax code in more than 30 years.

And yet that Mr. Trump is a very stupid man remains the assumption dominating his press coverage.

Let this columnist confess: He did not see Mr. Trump’s achievements coming, at least at first. In the worst sense, populism means pandering to public appetites at the expense of sound policy. Too often populists who get themselves elected find either that they cannot implement what they promised, or that when they do, there are disastrous and unexpected consequences.

Add to this the sorry experience America had recently had with men, also outside conventional politics, who ran successfully for governorships: former pro wrestler and Navy SEAL Jesse Ventura in Minnesota and actor Arnold Schwarzenegger in California. Their respective administrations each began with high enthusiasm but ended in defeat and disillusionment. What would make anyone think Mr. Trump would do better?

Start with Mr. Ventura. His populism, like Mr. Trump’s, featured open ridicule of the press. At one point he issued press cards listing them as “official jackals.” Also like Mr. Trump, he was treated as simple-minded because he was not a professional pol. When David Letterman listed his top 10 campaign slogans for Mr. Ventura, No. 1 was “it’s the stupidity, stupid.”

In his first year Mr. Ventura’s approval rating soared to 73%, and while in office he did manage to push through tax rebates and a property-tax reform. By his last year, however, his vetoes were regularly overridden, spending had shot up, and the magic was gone. In the end, he decided against seeking a second term.

Next came Mr. Schwarzenegger, who in 2003 announced his run for governor on “The Tonight Show.” Mr. Schwarzenegger’s pitch was essentially Mr. Trump’s: The state’s politics had been so corrupted by the political class that Californians needed a strongman from the outside to shake it up.

The Governator did succeed in getting himself re-elected three years later, which is more than Mr. Ventura did. In the end, however, he was defeated by those he’d denounced as the “girlie men” of Sacramento, and his package of reforms went nowhere. The man who entered office promising to cut spending and revive the state’s economy ended up signing a huge tax increase, while debt nearly tripled under his watch.

Now we have President Trump. In one sense he is not unique: Almost all GOP presidents are stereotyped as not very bright. Ask Ike, or George W. Bush, or even Lincoln. Nor is it uncommon, in the headiness of a White House, for even the lowliest staffer to come to regard himself as the intellectual superior of the president he works for.

In Mr. Trump’s case, critics equate lowbrow tastes (e.g., well-done steaks covered in ketchup) as confirmation of a lack of brainpower. It can make for great sport. But starting out with the assumption that the president you are covering is a boob can prove debilitating to clear judgment.

Quick show of hands: How many of those in the press who continue to dismiss Mr. Trump as stupid publicly asserted he could never win the 2016 election—or would never get anyone decent to work for him in the unlikely miracle he did get elected?

The Trump presidency may still go poof for any number of reasons—if the promised economic growth doesn’t materialize, if the public concludes that his inability to ignore slights on Twitter is getting the best of his presidency, or if Democrats manage to leverage his low approval ratings and polarizing personality into a recapture of the House and Senate this coming November. And yes, it’s possible to regard Mr. Trump’s presidency as not worth the price.

But stupid? Perhaps the best advice for anti-Trumpers comes from one of their own, a Vermont Democrat named Jason Lorber. Way back in April, in an article for the Burlington Free Press, the retired state politician wrote that “while it may be good for a chuckle, calling or even thinking someone else stupid is virtually guaranteed to give them the last laugh.”

Is that not what Mr. Trump is now enjoying at the close of his first year?

Write to

Tax Overhaul Could Jolt Dollar as U.S. Companies Bring Home Cash

December 25, 2017

Corporations could repatriate as much as $400 billion in earnings and cash from abroad

A provision of the tax overhaul is expected to release a tide of U.S. corporate cash from abroad, a development likely to jolt the dollar and reverberate throughout financial markets early next year.

Companies could bring back as much as $400 billion into the U.S., according to one estimate, as they take advantage of a one-time cut for repatriation of earnings and cash held overseas written into the GOP tax overhaul. That typically requires them to sell foreign holdings and buy assets denominated in dollars, which could boost the U.S. currency.

Gauging the dollar’s trajectory is crucial to both investors and corporations. The currency’s climb over the past several years has been blamed for pressuring profits among U.S. multinational companies and making exporters’ goods less competitive abroad. Its trajectory also exerts an influence on prices for raw materials like oil, copper and gold, which are denominated in dollars. Many investors expected the dollar to strengthen in 2017, boosted by the Trump administration’s fiscal stimulus and infrastructure spending pledges. Instead, the currency has fallen nearly 7% as of Friday against its peers, as key initiatives stalled.

“There should be some kind of boost to the dollar” from the tax plan, said Lee Ferridge, head of macro strategy for North America at State Street Global Markets. “But I will be using that as a selling opportunity.”

Some analysts said such a rally could mark a climax for the dollar’s nearly seven-year-long bull market, as monetary policy begins to tighten in other developed economies. Many expect more central banks around the world to start unwinding nearly a decade of postcrisis stimulus measures in 2018, a process already under way in the U.S. As central banks begin normalizing interest-rate levels, the dollar may become less appealing to some investors, who for years had sought U.S. assets because they offered yields that were high compared with other developed economies.

Bank of America Merrill Lynch, BNP Paribas and RBC Capital Markets all believe the dollar will start 2018 stronger, according to forecasts released in the last several weeks. Out of those banks, however, only analysts at RBC predict the currency will hold those gains into year-end.

There is less agreement among analysts on how much of the estimated more than $1 trillion U.S. companies have stashed abroad will be converted into dollars under the new tax law. That makes it difficult to gauge how the tax bill will affect the dollar, or what impact the repatriations will have on the economy.

A tax repatriation holiday enacted under the administration of George W. Bush in late 2004 prompted companies to bring in $312 billion, according to the Internal Revenue Service. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, broke a yearslong downtrend to rise nearly 13% in 2005, a move analysts attributed to cash flowing in the U.S. The S&P 500, which includes many multinationals, rose 3%—a smaller gain than in either of the two previous years.

This time around, repatriations could total between $200 billion and $400 billion, Bank of America Merrill Lynch estimates. The firm expects the euro to fall to $1.10 against the dollar in the first quarter of 2018 from around $1.1862 on Friday.

Atul Lele, chief investment officer at Deltec International Group, which oversees $5 billion, said repatriation will create demand for U.S. dollars, driving the currency higher. He also expects the tax cuts to juice U.S. growth and stimulate inflation, inducing the Federal Reserve to raise rates at a faster clip. Higher rates tend to boost the dollar, as they make the U.S. currency more attractive to investors seeking yield.

Mr. Lele owns shares of U.S. financials such as Citigroup and Wells Fargo, which he believes will benefit from stronger growth. He has also increased his dollar holdings to counterbalance assets he owns that are denominated in other currencies and would decline in value if the dollar strengthened.

GOP Tax Plan Calculator Calculate your taxes and discover the possible effect of the new law.

The tax plan is likely to have ramifications for the broader markets as well, some analysts said. Analysts at UBS Wealth Management said the legislation could provide the “icing on the cake” for an economy that is already going strong, contributing as much as 8% to corporate profits and a further upside of 5% to the S&P 500.

BMO Capital Markets cut its 2018 gold forecast by 1.5% to an average price of $1,280 a troy ounce to account for potential headwinds from a stronger dollar. The metal settled Friday at $1275.40 a troy ounce.

The most immediate threat to a dollar rally, however, could come from outside the U.S., where a burgeoning eurozone economy is paving the way for the European Central Bank to unwind its monetary easing policies and eventually raise rates. That would be a boon for investors who have wanted to diversify their dollar holdings but have stayed out of euros because interest rates in the region are currently near historic lows. The euro was up nearly 13% against the dollar this year as of Friday, and investors expect that rally to continue into 2018.

“We are positioned for the dollar to be a little stronger, and then we expect to lighten up on dollars in favor of euros,” said Nick Gartside, international chief investment officer of fixed income at J.P. Morgan Asset Management. He expects the euro to rise as high as $1.30 against the dollar by the end of 2018.

The shift is one that likely spells the end for the dollar’s yearslong rally, during which the U.S. currency has appreciated more than 30% against its peers, said Robert Tipp, chief investment strategist at PGIM Fixed Income. The dollar has appreciated more than 30% against its peers from its lows of 2011.

“You had a gigantic bull market in the dollar in recent years, but now the tide is turning,” Mr. Tipp said.

Write to Ira Iosebashvili at

The movement to impeach Trump is just beginning — Yet Democrats have no message, no leader and nothing to brag about

December 24, 2017

By Michael Goodwin
New York Post
December 24, 2017

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Before you settle down for a long winter’s nap with adult visions of sugar plums, consider a key fact about the 2018 midterm elections: We already know what they’re going to be about.

Republicans, thanks to their last-minute tax triumph, will run on a pro-growth agenda. If the middle-class tax cuts work as promised, if the economy cooperates by continuing to expand by 3 percent or more and produces jobs, jobs, jobs, the GOP will have a strong message to sell.

It will need one to protect its narrow margins in Congress, especially because the majority party usually loses seats in the first midterms.

Democrats, on the other hand, have no message, no leader and nothing to brag about. That leaves a vacuum, which is being filled with one idea: impeaching President Trump.

Now if an election that pits tax cuts and job growth vs. impeachment strikes you as crazy, don’t blame me. And, truth be told, you can’t really blame Democratic Party leaders either. They aren’t so much leading their base as following it.

The “resistance” wing is taking over the party and congressional bosses Sen. Chuck Schumer and Rep. Nancy Pelosi can either jump on the “Impeach” bandwagon — or get run over by it.

They’re capitulating already, as proven by the way Schumer and others reacted to a rumor last week that the president was going to fire special counsel Robert Mueller.

Never mind that Trump denied it, and there wasn’t even an anonymous source. It was just a rumor started by one House Democrat who said somebody she knew said something about Trump, so she repeated it to the media.

On cue, the Dem lemmings rushed to the microphones and cameras to warn that Trump would face impeachment if he fired Mueller. It was a sneaky way of sounding a dog whistle without a fact to justify it.

In fact, Schumer et al. would be head over heels with joy if Trump did fire Mueller. That would give their impeachment effort gravitas and make it more appealing to independent voters and even some Republicans.

So while they were warning Trump not to fire Mueller, their hope is that he does.

Politically, all this is catnip to the party’s media handmaidens and gives them something to write about instead of the GOP success at passing tax cuts.

Their nonstop chatter, including on the late-night comedy shows, is helping the impeachment madness break the bounds of the loony left and go mainstream.

In line with other recent polls, Quinnipiac’s latest survey reports that Trump’s national approval is just 37 percent, while 50 percent of voters, including 59 percent of women, believe he should resign — and that’s just over the sexual allegations against him.

Among Democrats, Trump’s resignation was favored by a whopping 85–12 percent, while independents favored it by 52–44 percent.

These numbers are off the charts, and they explain the bosses’ emerging strategy. While they’ll decorate the campaign tree with a few other items, like raising taxes on the wealthy and climate-change scares, removing the president will be their main argument for electing a Democratic Congress.

Not incidentally, notice that the sexual allegations against Trump, although they were made before he defeated Hillary Clinton, have replaced Russia, Russia, Russia as the main justification for impeachment. While the Harvey Weinstein-Charlie Rose tsunami is part of the explanation, the other part is that Dems are giving up on Mueller finding anything significant.

Cynic though I am, I never thought the Dems would go down such a low road.

A year ago, when Trump Derangement Syndrome picked up steam after his victory, I assumed it would last six months at most, and there were times when it seemed to be petering out. The “need to impeach” ads by hedge-funder Tom Steyer struck me as a billionaire’s folly.

But I was making the same mistake about the resistance that others had made about Trump’s electability. I assumed it wouldn’t last because nothing like it ever had.

But it’s clear now that the mob-like motivation isn’t going to disappear. It’s become a steamroller force on the left.

No other idea, whether it’s Bernie Sanders’ Free Stuff agenda, or the racial-ethnic-gender quota-spoils dreams of DNC boss Tom Perez, can match the fervor of the hate-Trump movement. It’s the straw stirring the drink.

Which is what makes it so dangerous. Never in modern times has a major party used impeachment as a pure political weapon.

Yet, assuming Mueller comes up with nothing significant, that’s exactly what Democrats are planning. They will try to win with impeachment what they lost at the ballot box, effectively nullifying the 2016 election.

Which brings me to my final prediction: If you think our politics are nasty now, just wait a few months. The midterm campaign is going to be vicious and dirty beyond belief.

Jerusalem Syndrome

It’s been decades since Abba Eban, the late Israeli diplomat and politician, made the observation that “Arabs never miss an opportunity to miss an opportunity.”

The latest mistake by the Palestinians proves Eban right again.

Against all reason, Palestinian leaders are hardening their response to President Trump’s recognition of Jerusalem as Israel’s capital.

President Mahmoud Abbas, elected to a four-year term nearly 13 years ago, initially grumbled and seethed but didn’t close any doors.

But emboldened by the toothless grandstanding of the United Nations General Assembly and fearful of Hamas terrorists, Abbas now says he will not accept any American plan for peace or consider America as a broker.

Instead, he’s turning to Russian President Vladimir Putin for help.

This is foolishness on stilts, with Trump eager to make a deal. For Abbas to refuse to hear him out is a replay of the Palestinian rejectionism Yasir Arafat specialized in — talk peace while encouraging violence and hope Israel somehow goes away.

But whatever you do, never, ever make a final deal to recognize Israel’s right to exist.

On a recent trip to Israel, we heard a Foreign Ministry official sum up the truth about why Palestinians always walk away from negotiations and turn to violence. “It’s not about the 1967 borders,” the official said, “it’s about 1948.”

Everything else is detail.


Analysis: How Consensus for Corporate Rate Cut Turned Into Partisan Tax Brawl

December 22, 2017

If there are problems with tax law, Republicans are unlikely to have willing partners in Democrats to fix it

President Donald Trump congratulates House Speaker Paul Ryan during an event at the White House to celebrate Congress passing the tax bill earlier this week.
President Donald Trump congratulates House Speaker Paul Ryan during an event at the White House to celebrate Congress passing the tax bill earlier this week. PHOTO: CHIP SOMODEVILLA/GETTY IMAGES

WASHINGTON—Both candidates in the 2012 presidential election ran on a corporate tax cut.

Five years later, a unified Republican government made that a reality, and a bipartisan idea has turned into a deeply partisan brawl.

President Donald Trump signed the 21% corporate tax rate into law Friday and Democrats are talking about which pieces of the bill they will keep and which they will toss aside should they assume power.

If there are problems with the law, Republicans are unlikely to have willing partners in Democrats to fix it, in the same way Republicans have stood against making many repairs to the Affordable Care Act.

The political backdrop to the tax overhaul is a warning sign. The new tax system encoded by Republicans is fragile. There are many challenges on the horizon that are likely to warrant changing the law—expiring provisions, tax competition from other countries, the risk of revenue shortfalls, the potential for flaws in the law itself that might be gamed by households or businesses.

As has been the case with the ACA, addressing them won’t be easy.

“It’s like training for a marathon. And you finally run a marathon,” said Jon Traub, a former Republican staff director at the House Ways and Means Committee who is now a managing principal at Deloitte LLP. “You can’t go back the next day and run another marathon.”

Image result for Kevin Brady, photos

Kevin Brady

The new law was designed, at least partly, with that idea in mind. Rep. Kevin Brady (R., Texas), one of its chief authors, talked frequently about the rate cut to 21% from 35% as a “leapfrog,” a way to get ahead of moves by other countries, in recognition that the U.S. system can move slowly.

But less than two hours after the bill was formally enrolled by congressional leaders on Thursday, Mr. Brady said the U.S. isn’t necessarily done jumping.

“For our foreign competitors, I want to make it really clear, we are not going to fall behind like we have as a country. We’re not waiting another 31 years,” he said, referring to other countries’ rate cuts since the previous U.S. reduction in 1986. “So we’ll do what it takes to compete and give our workers and businesses a fighting chance around the world.”

Mr. Brady has also talked about technical corrections, especially in international tax rules, as companies get familiar with the new system. He mentioned changes to retirement savings and education tax policies as possible areas for bipartisanship.

His Senate counterpart, Orrin Hatch (R., Utah), on Wednesday proposed extending a long list of tax provisions that expired at the end of 2016, an issue that lawmakers had hoped to address in the broader bill they just finished.

Republicans could try again to use the legislative process that let them pass this year’s tax law with a simple majority, but that is far from certain at this point. Anything else will require 60 votes in the Senate, and that means Democrats. The minority, sensing electoral opportunity in the bill’s low poll numbers, isn’t ready to engage.

“This bill is so bad that it’s very hard to fix in small little tweaks,” said Senate Minority Leader Chuck Schumer (D., N.Y.). “We’ll see what they propose.”

Democrats seem unlikely to roll back the increased child tax credit, larger standard deduction or lower tax rates in low- and middle-income brackets. But other provisions are in play. Rep. Richard Neal (D., Mass.) would become Ways and Means chairman if Democrats retake the House in 2018. The first two items on his list were pushing the top individual tax rate back from 37% to 39.6% and reversing the doubled exemption for the estate tax.

Asked whether Democrats would help plug revenue holes if the new GOP law spurs more tax avoidance than expected, Mr. Neal demurred.

“We have to wait and see after there is an acknowledgment on their side that it didn’t work,” he said.

The path to the corporate tax cut is instructive in just how hard it might be to replicate anything like it.

For a long time, Republicans and Democrats agreed that U.S. corporate tax rates were too high, encouraged tax avoidance and made the U.S. uncompetitive globally.

In 2005, President George W. Bush’s tax overhaul commission proposed setting the rate as low as 30%. Then Rep. Charles Rangel (D., N.Y.) offered a 30.5% rate in his 2007 “mother of all tax reforms.” Sen. John McCain (R., Ariz.) included a rate cut in his presidential campaign in 2008.

When Republicans took the House in 2010, then-Rep. Dave Camp (R., Mich.) took up the charge for a 25% rate, joined by a coalition of companies that sensed an opportunity.

“There was some point in the late 2000s where everybody started to realize that the United States was just behind the rest of the world. We were sticking out like a sore thumb,” said Rachelle Bernstein, tax counsel at the National Retail Federation. “It’s a dozen years that we’ve sort of been in the wilderness of getting to this point.”

President Barack Obama joined in 2012, seeking a 28% rate. His rival that year, Mitt Romney, pushed for 25%. At times, a deal looked possible, whether between Mr. Obama and then-House Speaker John Boehner or between Mr. Camp and then- Sen. Max Baucus (D., Mont.).

By the time Mr. Camp released his plan in February 2014, GOP leadership showed little inclination to work with Mr. Obama on a compromise and gave Mr. Camp little support.

In the end, the only way to move forward was to look inside the Republican Party itself.

Beyond the worsened Washington gridlock, the corporate rate cut took a long time because Republicans had trouble deciding what to package with it. Removing business tax breaks would erode support. Leaving out pass-through businesses—partnerships, S corporations, sole proprietorships—would fracture the GOP. Ignoring individual taxes would make the idea politically treacherous.

Something had to give and that was the stated Republican commitment to reducing budget deficits. When they agreed to allow adding $1.5 trillion to deficits over the next decade, the door opened to drive the corporate rate all the way down to 21% without some of the other painful trade-offs they had considered.

There were still last-minute efforts this month to get a bipartisan deal, after Mr. Trump signaled that the 20% corporate tax rate he had insisted on might go to 22% in the final version.

Sen. Bob Corker (R., Tenn.) said he told Mr. Trump and his advisers that an agreement with Democrats was possible to create a more durable bill, a legacy for the president that wouldn’t be ripe for immediate reversal. Mr. Corker said he pushed for the president to meet with 10 to 12 Senate Democrats to see what was possible. It didn’t happen because a process was in train that Republican leaders didn’t want to derail.

“Their concern was: They had the votes,” Mr. Corker said in an interview this week. “If they brought in Democrats and began adjusting anything, it could cause the Republican side of this to fall apart.”

Democrats Against Tax Reform — Democratic left turn isn’t good for the country

December 19, 2017

Unlike the past, the GOP has had no help passing these tax cuts.

Democrats Against Tax Reform

Republicans are poised this week to cut taxes for most American workers and businesses, fulfilling a core campaign promise. But before the House and Senate vote, it’s worth noting that they may do so without a single Democrat in support. How has the party of the Kennedy tax cuts of the 1960s and the co-writers of the Reagan reform in the 1980s become implacably opposed to pro-growth tax policy?

A little history shows how remarkable this is. The Kennedy marginal tax-rate cuts were pushed by White House economist Walter Heller and powered the economic expansion for another half-decade. In the 1981 tax debate, William Brodhead of Michigan and other Ways and Means Democrats offered an amendment that cut the top rate on investment income to 50% from 70% in the first year.

The 1986 tax reform was driven as much by Democrats as by Ronald Reagan. Dick Gephardt and Dan Rostenkowski helped move it through the House, and Bill Bradley was a leading architect in the Senate. Thirty-three Democrats voted for the bill that passed the Senate 74-23 and cut the top marginal income tax rate to 28%.

Bill Clinton raised taxes in 1993, but after his re-election he compromised with Newt Gingrich in 1997 to cut the capital-gains tax rate to 20% from 28%. That drove investment and growth through the rest of the decade. Even as recently as 2001, a dozen Democrats in the Senate and 28 in the House compromised with George W. Bush to cut the top income-tax rate to 35%.

Yet this year not a single Senate Democrat seems willing to vote to cut the top rate a mere 2.6-percentage points to 37% or reform a corporate tax code that Democrats have long recognized is anti-competitive. Had they engaged with Republicans to provide 60 votes, they surely could have influenced the bill.

They might have saved most of the state-and-local tax deduction that helps Democratic states keep taxes high. Now Democrats in New Jersey and California are left to moan that perhaps they’ll have to stop raising taxes on high-earners. Or perhaps Democrats could also have proposed eliminating the corporate tax in return for a long-time progressive priority like a carbon tax. Instead they chose total resistance, and policy irrelevance.

Part of the explanation is ideological. The Democrats as a party moved sharply left during the Obama years—on economics nearly as much as on identity politics. They have made income inequality their main economic priority rather than growth, and the fact that the slow-growing Obama economy increased inequality hasn’t changed that obsession.

One result is that there isn’t a pro-business Democrat left in the Senate, except perhaps on energy policy in fossil-fuel states like West Virginia and North Dakota. Democrats are now the party of Thomas Piketty, the French economist who thinks tax rates should return to pre-Kennedy levels to reduce inequality.

Democratic economists who might have offered an alternative view have no choice but to go along if they ever want to serve in another Democratic administration. They all saw what Elizabeth Warren and the Democratic left did to block Larry Summers from getting the job of Federal Reserve Chairman.

The other explanation is the political calculation that opposition will help Democrats retake the House and Senate in the 2018 midterm elections. President Trump is unpopular, and they figure his polarizing behavior will drive enough Democrats in the polls to save Senate incumbents even in states that Mr. Trump carried in 2016. Heidi Heitkamp (North Dakota), Joe Donnelly (Indiana) and Claire McCaskill (Missouri) figure that the safer play is to oppose all things Trump and mobilize the base vote.

Perhaps that bet will pay off, but then they are also betting that tax reform will fail to increase growth and wages. If it does succeed in spurring the economy, they will have had no stake in that success. Republicans will surely point that out, especially if the popularity of the tax bill rises once voters see the results in higher after-tax income.

Whatever the political results next year, this Democratic left turn isn’t good for the country. The U.S. has historically prospered when there is a growth wing in both major political parties. A Democratic growth wing is all the more important because the GOP is developing an income-redistribution wing led by Florida Senator Marco Rubio that has watered down the growth elements of this tax reform and almost scuttled it.

After the slowest expansion in decades and tepid wage growth, Americans should want this tax reform to succeed and it’s a shame Democrats are rooting for failure.

Appeared in the December 18, 2017, print edition.

U.S. Businesses Find Welcome Surprises in Tax Bill

December 19, 2017

Last-minute changes to the tax-overhaul bill dropped key provisions that most worried companies while raising other costs slightly

The final tax bill offers much of what large companies hoped to gain from the Republican overhaul: the billboard corporate rate was knocked down, cuts were accelerated and key credits were preserved.

“Overall, the business community is very pleased with the bill,” said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce. “If someone would have said 11 months ago, by the end of the year we’d able to produce a bill and get it to the president’s desk that does these things, skepticism would have been sky high.”