Posts Tagged ‘tax cuts’

US economy grew at a faster pace in fourth quarter 2017

March 28, 2018


© GETTY/AFP | A jump in US consumer spending helped put GDP growth higher than previously reported at 2.9 percent

WASHINGTON (AFP) – The US economy grew significantly faster at the end of 2017 than previously reported, as consumer spending hit an three-year high and business investment rose, the government reported Wednesday.The rosier revised estimate for the October-December period was a modest shot in the arm for President Donald Trump, whose trade policies face stiff opposition at home and abroad and has sent shudders through stock markets.

GDP grew 2.9 percent in the final three months of last year, 0.4 points higher than the prior estimate, the Commerce Department said. And that rate was significantly faster growth than analysts were expecting.

The third and final quarterly estimate, based on a fuller set of data, marked the third quarter in a row at or around President Donald Trump’s target of three percent annual growth.

And the new estimate does not account for December’s sweeping $1.5 trillion tax cuts, which economists say should boost growth in the near term at least for a short time

“Consumer spending appears to have had its strongest quarter in three years,” Oxford Economics said in a research note, adding that tax cuts and stronger government spending should fuel GDP in 2018.

But for all of 2017 the growth rate was unchanged at a modest 2.3 percent, faster than the 1.5 percent posted in 2016, but still well below Trump’s goal and the 2.9 percent expansion seen in 2015.

The Trump administration is counting on an acceleration of growth to pay for the December tax cuts, which are expected to swell the budget deficit and add to the mounting US sovereign debt.

However, economists point to stagnating US productivity and a possible trade war as a drag on growth, and warn the tax cuts will drive the Treasury deeper into the red.

– Corporate profits slide –

The upward bump to the fourth-quarter growth estimate came from higher consumer spending, higher wholesale business inventories and updated statistical adjustments to account for seasonal factors, according to the Commerce Department.

Consumption hit the highest pace in three years, as consumer spending on goods saw its biggest quarterly bounce in nearly 12 years after an upward revision of three tenths to 7.8 percent.

Consumer spending on transportation pushed US services growth to 2.3 percent in the quarter, up two tenths from the prior estimate.

Those results helped offset the economic drag from rising imports, after the US trade deficit hit a nine-year high in 2017.

Despite the accelerating economic growth, corporate profits stagnated in the quarter, falling 0.1 percent after the prior quarter’s $90.2 billion increase.

The financial sector saw a $14.6 percent decrease but the non-financial sector experienced a $19.4 billion increase for the quarter.

Profits for 2017 were up $91.2 billion after the $44 billion decline in the prior year.

The December tax cuts imposed a one-time repatriation tax on foreign earnings, recorded as a $250 billion quarterly capital transfer from businesses to the federal government, according to the Commerce Department.

“We judge the economy by nonfinancial domestic profits, capital spending, and employment and these metrics look solid in 2017,” RDQ Economics said in a research note.

And companies were expected to reap the benefits of lower taxes in the coming year.

Current forecasts point to growth of below two percent in the first quarter of 2018, although first quarters typically are slower than annual growth.


Trump trade shifts could undo tax boon: business lobby

March 13, 2018


© GETTY/AFP/File | JPMorgan chief Jamie Dimon, who chairs the Business Rountable, says issues around trade need to be thought through with allies

NEW YORK (AFP) – US business sentiment has soared after tax cuts, but the gains could be undone by restrictive trade policy in the Trump era, the Business Roundtable said Tuesday.Business Roundtable president Joshua Bolten warned that corporate confidence faces a “possible major headwind” from shifting trade policies and that a US exit from NAFTA would be a “disaster” for US companies.

The lobbying group, which represents large US companies, released a quarterly business survey that showed surging expectations for hiring and capital investment after President Donald Trump signed massive US tax cuts into law in December.

But the survey of chief executives, which came in at the highest-ever level in the index’s 15-year history, was conducted in February prior to Trump’s controversial decision to impose tariffs on imported steel and aluminum.

Questions about trade dominated a brief conference call with reporters.

“There are issues (around trade),” said JPMorgan Chase chief executive Jamie Dimon, who serves as chairman of the roundtable.

“But the right way to go about that is to really think it through strategically with the allies and make sure we’re doing the right thing and not doing these one-off things which tend to backfire.”

Bolten said the group was working to “scale back” the steel and aluminum tariffs and described other levies suggested by Trump administration officials in response to foreign tariffs on US goods as bad for business.

“Predictability and consistency is absolutely crucial for all of our CEOs’ planning,” Bolten said.

Bolten also expressed worry over the state of talks on the North America Free Trade Agreement, which Trump has sometimes said the US might quit.

“We are strongly opposed to any direction in the negotiations that might result in US withdrawal from NAFTA, which would be a disaster not so much for the Mexicans and the Canadians, but for US businesses and exporters,” he said.


CNN Money

Jamie Dimon has a message for President Trump: Corporate America is worried about your trade agenda.

The JPMorgan Chase (JPM) boss warned on Tuesday that “one-off things” like Trump’s tariff plans “tend to backfire.”

Dimon is the chair of the Business Roundtable, a powerful lobby that represents major corporations. He said on a conference call with reporters that the group is “very concerned” that Trump’s trade policy “will do more harm than good to the economy.”

Dimon conceded he agrees with Trump that there are “some major issues around trade.” But rather than imposing various tariffs, Dimon said “the right way to go about it is to think about it strategically with allies.”

Last week, Trump detailed plans to impose tariffs of 25% on steel and 10% on aluminum, both aimed at reviving those industries in the United States. Major trading partners, including allies like the European Union, have threatened to retaliate. A wide range of businesses, from automakers to brewers, have expressed concern about higher prices.

Trade barriers are a “recipe for disaster and a cascading trade war,” warned Joshua Bolten, CEO of the Business Roundtable CEO and a former chief of staff under President George W. Bush. He said these actions could cause an economic downturn in the United States.

The White House has pushed back against concerns of a trade war. Last week, Commerce Secretary Wilbur Ross said the tariffs will be implemented “without blowing up the world.” And Trump softened his initial stance by exempting Canada and Mexico from the tariffs, at least for now.

Related: What is the WTO and how does it work?

The Business Roundtable staunchly defends free trade. Its member companies, which employ more than 16 million people, get about one-third of their sales from outside the United States.

Bolten said the group is deeply engaged with the administration on the tariffs and is “pressing hard to get those scaled back.” He added, “we are hopeful the administration will listen.”

CEOs are also paying close attention to Washington’s attempt to renegotiate NAFTA, a trade deal with Canada and Mexico that is firmly ingrained in the way North American companies do business. Trump has repeatedly threatened to withdraw the United States from NAFTA, an outcome that Bolten said would be a “disaster” for American companies that export.

The Business Roundtable is concerned that Trump’s increasingly aggressive stance on trade will drown out any economic benefits from the administration’s efforts on taxes and deregulation.

Thanks in large part to Trump’s business tax cuts, business leaders polled by the Business Roundtable last month were feeling extremely confident. The Business Roundtable’s CEO Economic Outlook Index surged to the highest level since the survey began at the end of 2002.

The most recent survey, which was taken before Trump’s tariff announcement, showed that CEO plans for hiring and capital investment also hit all-time highs. Expectations for 2018 economic growth were also higher.

The question now is whether Trump’s toughening stance on trade will darken the outlook.

Bolten said “missteps” on trade threaten to “undermine” Trump’s progress on taxes and deregulation, “perhaps even reverse it.”

Includes video:


Over Trump, We’re as Divided as Ever

March 9, 2018

One thinks: He’s crazy . . . and it’s kind of working. But everything we know tells us crazy doesn’t last.

Supporters of US President Donald Trump hold signs as his motorcade nears his Mar-a-Lago resort in West Palm Beach, Florida, Dec. 29, 2017.
Supporters of US President Donald Trump hold signs as his motorcade nears his Mar-a-Lago resort in West Palm Beach, Florida, Dec. 29, 2017.PHOTO: AFP/GETTY IMAGES

In just a few months, in June, it will be three years since Donald Trump announced for the presidency. It feels shorter ago and longer. I will never forget that day. I watched it live, at home, wondering where this circus act was going. But as soon as the speech was over the phone rang and it was my uncle—husky Brooklyn accent, U.S. Marine of the Korean era—who said, “So how do you like my guy?” There was silence. “He’s—your guy?” “Yeah! Maybe he can do something.” We no sooner hung up than my sister—working-class, Obama voter—called, and she too began without preamble: “I looooove him.”

And so I was alerted early on to an epochal change in our national political life. My uncle and sister are not ideological, are skeptical of both parties, and tend to back the guy who seems most promising. They love America and wear it on their sleeves. They’re patriots.

A great deal of embarrassed attention has been paid by the press as to why half the country in 2016 refused to do what it was supposed to do and reject Mr. Trump.

Granted: Mr. Trump didn’t start the fire. A great deal had to go wrong before America put a man like him, a TV star/brander with no political experience and a sketchy history, in the presidency. The political class right and left, Dem and Rep, had to fail, and did, spectacularly, with the 2008 crash and two unwon wars. Their biggest sin the past few decades: The wealthiest and most powerful Americans, those who had most benefited from its system, peeled off from the less fortunate and made clear they were not especially concerned about their problems. Stupidly, and they are stupid, they didn’t even fake a prudent interest. The disaffected noticed this lack of loyalty and decided to respond with a living insult named Donald Trump, whom they sent to Washington to contend with a corrupt establishment.

All granted and, in these pages, previously stated at great length.

But this is about those who do not back him, many of whom are centrists and moderates. I’m not sure enough attention is given to their thoughts. It’s also about a fairly widespread cognitive dissonance that is causing fairly widespread disquiet.

Suppose you are an able and accomplished person in business—a midlevel person, or a small-business owner, or the head of a company. You’ve navigated your way through life with judgment and effort. You’ve learned lessons.

If you are that person, when you look at the policy impact of President Trump’s first year, you see some good and heartening things.

He has established in his government a deregulatory spirit that is fair and helpful. Regulation, you know, is good—we’re all human; business leaders will make decisions that are good for the company or shareholders or themselves, but not necessarily good for the town, state, country. So regulation has an important role: It helps you be a good citizen and gives cover to you when you are one. But excessive regulation, especially when it springs from ideological animus or practical ignorance, kills progress, growth, jobs, good ideas and products.

Mr. Trump has put a sober conservative on the Supreme Court, and many conservative judges on the lower courts. This provides greater balance in the judiciary. In a split country, split courts—balance—is probably the best we can do.

The economy is improving. And Mr. Trump helped pass a tax bill that was better—maybe a little, maybe a lot, but certainly better—than what it replaced.

Not bad for a first year in office!

So you, moderate, centrist professional, should feel high enthusiasm for Donald Trump. And yet you don’t, not really. What you feel is disquiet, and you know what it’s about: the worrying nature of Mr. Trump himself. You look at his White House and see what appears to be epic instability, mismanagement and confusion. You see his resentments and unpredictability. You used to think he’s surrounded by solid sophisticates, but they’re leaving. He’s unserious— Vladimir Putin says his missiles can get around any U.S. defense, and Mr. Trump is tweeting about Alec Baldwin. He careens around—he has big congressional meetings that are like talk shows where he’s the host, and he says things that are both soft and tough and you think Hmmm, maybe that’s a way through, but the next day it turns out it was only talk. This has been done on the Dreamers, on guns and we’ll see about tariffs. He loves chaos—he brags about this—but it isn’t strategic chaos in pursuit of ends, it’s purposeless disorder for the fun of it. We are not talking about being colorfully, craftily unpredictable, as political masters like FDR and Reagan sometimes were, but something more unfortunate, an unhinged or not-fully-hinged quality that feels like screwball tragedy.

He’s on the phone with his friends: He doesn’t like the chief of staff; he may be out. He doesn’t like his national security adviser; he doesn’t like his attorney general; they may be out too. His confidante Hope Hicks is gone; so is Dina Powell ; now Gary Cohn is gone. His staff never knows what’s he’s going to do on any given day. And each day the Mueller leaks offer more evidence that whatever questionable or illegal activity took place during the campaign, Mr. Trump surrounded himself with a true Team of Screwballs.

Here is what you try to wrap your head around if you are a centrist or moderate who’s trying to be fair. You think: On some level this is working. And on some level he is crazy.

He’s crazy . . . and it’s kind of working. You struggle to reconcile these thoughts. You try to balance them.

Then you realize everything you’ve learned from life as a leader in whatever sphere—business, local public service—tells you this: Crazy doesn’t last. Crazy doesn’t go the distance. Crazy is an unstable element that, when let loose in an unstable environment, explodes.

And so your disquiet. Sooner or later something bad will happen—an international crisis, or damaging findings from the special counsel. If the president is the way he is on a good day, what will he be like on a bad day?

It all feels so dangerous.

A president who has relative prosperity and relative peace should be at 60% approval. This is why he is about 20 points lower.

Observations and criticisms like this make Mr. Trump’s supporters angry and defensive. So he’s not smooth, they say—“We never thought he was!” So he doesn’t have the right tone, he doesn’t always use the right words—“You’re like old-time snobs looking down on him because he uses the wrong fork.”

But it’s a little more essential than that.

Centrists and moderates are seeing what Trump supporters cannot, will not see.

Expecting more from the president of the United States springs from respect for the country, its institutions, and the White House itself. It springs from standards, the falling of which concerns natural conservatives.

It isn’t snobbery. The people trying to wrap their heads around this presidency are patriots too. That’s one of the hellish things about this era.

Gary Cohn Out At White House — a big blow to Washington Republicans and business leaders seeking to prevent the president from igniting a global trade war

March 7, 2018

Image may contain: 2 people, people standing and suit

Departure deals blow to Republicans trying to rein in president on tariffs

By Shawn Donnan and Sam Fleming in Washington
Financial Times (FT)

Gary Cohn, Donald Trump’s top economic adviser, has resigned after losing a heated White House battle over tariffs, dealing a big blow to Washington Republicans and business leaders seeking to prevent the president from igniting a global trade war.

The exit is the latest in a series of high-level White House departures and is likely to fuel concerns about an administration in chaos. It will also raise questions about the direction of US economic policy now that Mr Cohn — a pro-trade, pro-market former Wall Street banker — is no longer heading the National Economic Council.

Stock prices and the dollar remained lower as markets considered the implications, with the S&P 500 off 1.2 per cent in after-hours trading in New York. Bond prices also strengthened, a signal of demand for safe assets, while equities also fell in Asia and Europe.

In a statement, the White House said Mr Cohn, the 57-year-old former number two at Goldman Sachs who was once considered by Mr Trump as a candidate to lead the Federal Reserve, would be leaving in the coming weeks.

“It has been an honour to serve my country and enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform,” Mr Cohn said. “I am grateful to the president for giving me this opportunity and wish him and the administration great success in the future.”

This is a very jarring moment. Folks have a sense of there being no brakes left on the vehicle and the steering wheel having come off

Mr Trump tweeted that he would be “making a decision soon on the appointment of new Chief Economic Advisor. Many people wanting the job — will choose wisely!”

In a statement, the president said Mr Cohn had done “a superb job in driving our agenda, helping to deliver historic tax cuts and reforms and unleashing the American economy once again”. He added: “He is a rare talent, and I thank him for his dedicated service to the American people.”

A pragmatic, focused leader who was popular among White House staffers, Mr Cohn is understood to have resisted to the end Mr Trump’s plans to roll out steel and aluminium tariffs in the name of US national security. He has been joined in opposition to the plan by cabinet members including Steven Mnuchin, Treasury secretary; Rex Tillerson, secretary of state; and Jim Mattis, defence secretary.

Earlier in the day, the president dismissed reports of chaos within his administration, saying his White House had “tremendous energy”. But the president conceded: “I like conflict . . . I like watching it, I like seeing it, and I think it’s the best way to go. I like different points of view.”

Mr Cohn’s resignation comes in the immediate aftermath of the departures of Hope Hicks, former White House communications director, and Rob Porter, who was the staff secretary. It coincides with concerns that the policymaking process has become disorderly despite the presence of John Kelly, who replaced Reince Priebus as chief of staff last year.

Mr Cohn is leaving after Mr Trump ignored his advice and made an ad hoc announcement last week that he planned to impose tariffs of 25 per cent on steel and 10 per cent on aluminium on imports from all countries.

Mr Trump is expected to sign those tariffs into law in the coming days. The EU, Canada and other countries have vowed to retaliate.

Mr Cohn was seen as the most effective voice among centrist pro-trade and pro-business Trump advisers. In the short term, the result is likely to be a powershift toward economic nationalists such as Peter Navarro, a trade adviser, and Wilbur Ross, commerce secretary, both advocates of high tariffs on steel and aluminium.

One Republican policy expert said party leaders, almost all of whom oppose Mr Trump’s tariffs plan, considered Mr Cohn a “guarantor of stability on economic issues”.

“This is a very jarring moment,” the expert said. “Folks have a sense of there being no brakes left on the vehicle and the steering wheel having come off.”

Steve Moore, a Heritage Foundation economist who advised the Trump campaign, said he believed that Larry Kudlow, a CNBC commentator and former Reagan administration official, would be a contender to replace Mr Cohn. “Larry is a great communicator — he can communicate the message on tax cuts, growth and deregulation, the energy policies that Donald Trump has been promoting,” he said.

Mr Kudlow, however, has also been an outspoken critic of Mr Trump’s tariffs plan. “We are imposing sanctions on our own country,” he wrote in a CNBC column. “If ever there were a crisis of logic, this is it.”

Some senior Republicans in Congress openly bemoaned Mr Cohn’s departure. “Gary Cohn has been a strong voice for free markets and one that will be missed,” said Jeb Hensarling, chairman of the House Financial Services Committee.

“The administration will look very different without him. It will look more populist,” said Michael Strain of the American Enterprise Institute. “Gary Cohn was a leader of the camp in the White House that supported free trade and a traditional — in my view correct — understanding of global commerce. Having him leave is a blow in that important policy area.”

Lloyd Blankfein, Mr Cohn’s former boss at Goldman Sachs, tweeted: “Gary Cohn deserves credit for serving his country in a first class way. I’m sure I join many others who are disappointed to see him leave.”

Mr Cohn’s standing with the president suffered a big blow in August after he broke with Mr Trump over violent protests by neo-Nazis and white supremacists in Charlottesville, Virginia, that left one woman dead.

Mr Cohn told the Financial Times after that episode that he had felt “enormous pressure” to quit following the uproar over the president’s comments blaming “both sides” for the violence and suggesting there were “very fine people” among white supremacist groups.

Mr Cohn went on to play an important role in the main legislative achievement of the Trump administration — the tax reform package passed by Congress late year. But speculation over his potential exit never went away.

Additional reporting by Nicole Bullock in New York

The Cohn Departure — Another Expert Leaves Trump

March 7, 2018

The tariff mess has cost President Trump an important ally.

Former White House chief economic adviser Gary Cohn speaks to reporters during the daily press briefing at the White House, Jan. 23.
Former White House chief economic adviser Gary Cohn speaks to reporters during the daily press briefing at the White House, Jan. 23. PHOTO:MANUEL BALCE CENETA/ASSOCIATED PRESS

The resignation of Gary Cohn is a significant blow to Donald Trump’s Presidency, and recovering from it will be a significant challenge.

Departures are normal after a President’s second year, but the circumstances of Mr. Cohn’s leave-taking as top economic advisor are anything but normal after only 14 months.

Mr. Cohn was in the middle of a major policy dispute inside the Trump administration over trade policy. On one side were Mr. Cohn and free-trade advocates, and on the other was the Administration’s protectionist wing led by Commerce Secretary Wilbur Ross, trade negotiator Robert Lighthizer and Mr. Trump’s personal trade swami, Peter Navarro.

Losing policy disputes comes with the job, but the particulars of this loss revealed more about Mr. Trump’s increasingly self-damaging style of managing his senior officials.

Last week, the President announced his intention to impose tariffs on imported steel and aluminum, though “announcement” overstates what happened. Mr. Trump essentially blurted out the news at a White House meeting, blind-siding Mr. Cohn and the rest of the Administration team, in what amounted to a coup d’état by Mr. Ross and the protectionists.

Predictably the news caused a firestorm in financial markets and among countries who are not merely U.S. trading partners but its needed allies on international security issues, such as enforcing sanctions against North Korea.

Mr. Cohn leaves behind a strong legacy. He pushed hard for deregulatory initiatives that have produced strong growth. With Council of Economic Advisers Chair Kevin Hassett, he ran point for the White House on the big tax-cut bill. As important, Mr. Cohn assembled a first-rate team of policy advisors, not just on taxes but also on health care and infrastructure.

So an obvious question: Who will replace him? Put differently, who in the community of free-market economic specialists would take the job now? Mr. Cohn, a strong personality in his own right, provided ballast against some of Mr. Trump’s worst economic-policy instincts. It is difficult to imagine that anyone outside the President’s current protectionist cheer-leading squad would volunteer to put up with more of what happened during the past week.

Mr. Trump’s early appointments to key Cabinet positions and to the White House policy-making apparatus were often stellar. Now, surely, the mill of rumors will begin grinding about more departures of top people, such as National Security Adviser H.R. McMaster.

A successful President needs allies, and Mr. Trump has had them so far. By contrast, the tariff decision is a leadership fiasco that has cost Mr. Trump a key ally in Gary Cohn. It is a loss, and this Presidency cannot afford more like it.

Appeared in the March 7, 2018, print edition as ‘The Cohn Departure.’

See also:

Gary Cohn resigns as Trump’s top economic advisor

Uncle Sam must rein in retirement benefits or we’re headed for economic disaster — “the most predictable economic crisis in history.”

March 6, 2018

By Brian M. Riedl


The American polity recently tore itself apart debating the morality of adding $1.5 trillion in tax cuts to the national debt. Yet the $82 trillion avalanche of Social Security and Medicare deficits that will come over the next three decades elicits a collective shrug. Future historians — and taxpayers — are unlikely to forgive our casual indifference to what has been called “the most predictable economic crisis in history.”

Over the next 30 years, according to data from the Congressional Budget Office, Medicare will run a $40 trillion cash deficit, Social Security will run a $19 trillion cash deficit and the interest on the resulting program debt will be $23 trillion. (To inflation-adjust these figures, trim by one-third.)

CBO projects that, over the next 30 years, the national debt will grow from $20 trillion to $92 trillion ($52 trillion after inflation) — or much higher if interest rates return to historically typical levels.

Politicians brush aside the issue by promising easy fixes. Tax the rich? Doubling the 35 and 37 percent tax brackets to 70 and 74 percent would close just one-fifth of the long-term Social Security and Medicare shortfall. Even seizing all annual income earned over $500,000 would not come close. Popular proposals to more aggressively tax banks, investors, hedge-fund managers and oil and gas companies are a cumulative rounding error compared with these deficits.

On the spending side, slashing the defense budget to European levels would close just one-seventh of the gap. Cutting waste and foreign aid can close only a small percentage of it.

In reality, balancing the long-term budget without reforming Social Security and Medicare (and fast-growing Medicaid) would require either nearly doubling income-tax rates across the board or eliminating nearly every remaining federal function.

Steep economic growth could close only some of the shortfall. Growth rates will already be limited by the labor-force slowdown caused by Baby Boomer retirements and declining birth rates.

That leaves productivity to drive growth. Even assuming the white-hot 1.8 percent rate that prevailed from 1992 through 2005, the resulting higher incomes and tax revenues would seem to close 40 percent of the funding gap — until one accounts for the fact that higher incomes would automatically result in higher Social Security benefits when these workers retired.

Finally, there’s the argument that Social Security and Medicare represent an unbreakable, unamendable promise to the elderly, consequences be damned. Of course, today’s teenagers never signed up for this budget-busting deal. Besides, benefits have been repeatedly expanded far beyond what current retirees were promised while working.

Those reasonably claiming “I just want the benefits I earned!” should be considered allies for reform. Setting lifetime Social Security and Medicare benefits equal to the net present value of each person’s lifetime contributions to the systems — and not a penny more — would eliminate most of the long-term shortfall.

More realistically, Social Security can be addressed by gradually raising the eligibility age and more aggressively means-testing benefits for wealthy retirees. Medicare reform can require that upper-income seniors pay the full cost of their physician and drug coverage (which, unlike hospital coverage, is not “earned” with prior payroll taxes) and eventually transition to a premium-support model that harnesses private-sector choice and competition to slow cost growth.

These reforms would largely shield younger taxpayers, because drowning the next generation in taxes is no better than drowning them in debt.

Restructuring cannot wait. Every year of delay sees 4 million more Baby Boomers retire and get locked into benefits that will be difficult to alter, and yet the window is closing fast on the longstanding promise to exempt current and near-retirees. More than one-third of all Baby Boomers have already retired, and another third will retire over the next six years.

Ultimately, the math always wins. The deficit will continue expanding, key programs will continue to be squeezed and taxes will rise until politicians and voters finally confront the elephant in the room.

Brian Riedl is a senior fellow at the Manhattan Institute. Reprinted with permission from National Review.

Freewheeling Trump at CPAC touts armed teacher proposal

February 23, 2018

Washington (CNN) — A freewheeling President Donald Trump offered a political greatest hits reel Friday to the highest-profile right-wing gathering of the year, basking in conservative plaudits for what he characterized as a triumphant first year in office.


Quickly discarding prepared remarks he deemed “sort of boring,” Trump lit into Democrats and even some Republicans who he deemed insufficiently doctrinaire, and again called for teachers to be armed in schools as a response to the Florida shooting last week.
He welcomed familiar chants like “lock her up” about Hillary Clinton, the opponent he defeated 15 months ago. And he pledged to protect gun ownership rights, even amid an emotional national debate over guns in which he’d pledged new restrictions.
It was Trump’s second appearance as President at the Conservative Political Action Conference, held just outside Washington in Maryland. His speech at CPAC last year was a blistering and dark diatribe that cemented the notion that Trump would not adhere to presidential norms.
This time around, Trump was more upbeat. He declared his administration “has had the most successful first year in the history of the presidency,” naming tax cuts and a regulatory overhaul as his chief accomplishments.
He went on an extended riff about immigration, vowing to build his promised border wall, lamenting a system he claimed was woefully broken, and declaring Democrats were unwilling to accept an agreement that would reform the DACA program. He launched into the “snake” fable that formed a major portion of his campaign stump speech, glistening with sweat as he warned against accepting immigrants he characterized as violent criminals.
And he was gleeful in his assaults on political rivals. He deemed Democrats “really crazed.” And though he didn’t name Sen. John McCain, the ailing Arizona Republican, he lashed out at his vote against a health care repeal that many Republicans backed.
“It would be controversial so I won’t use his name,” Trump said. “What a mess.”
The Republicans who organize CPAC and fill its speaking roster have sometimes cringed at Trump’s harsh rhetoric, but they tolerate it in the hopes he can help shepherd through a staunchly conservative agenda.
They have largely been rewarded over the past year, as Trump has approved sweeping tax cuts that include slashing the corporate rate, a massive unraveling of regulations and the partial repeal of the Affordable Care Act.
Their tolerance for Trump’s crude brashness may be tested in the gun debate. The President has vowed to take action to prevent school shootings like the one in Florida last week, and he has expressed openness to at least one measure opposed by the National Rifle Association: raising the minimum age to purchase firearms like the AR-15.
On Friday, however, Trump declared himself firm in his support for gun ownership rights, despite his pledges this week to take some action on guns.
“They will put judges in that you wouldn’t believe, they’ll take away your 2nd Amendment, which we will never allow to happen, they’ll take away your 2nd Amendment,” he said of Democrats to raucous cheers from the crowd, which skews younger.
“Remember that,” Trump said, “they will take away those massive tax cuts, and they will take away your Second Amendment.”
Opening his speech Friday, Trump touted accomplishments, despite what he said was skepticism about his conservative bona fides.
“Remember when I first started running — I started running and people said are you sure he’s a conservative. I think now we can say I’m a conservative,” he said. “We have put more great conservative ideas into use than perhaps ever before in American history.”
In his speech, he addressed last week’s shooting in Florida and continued his call for some teachers to be armed.
“When we declare our schools to be gun-free zones it just puts our students in far more danger,” he said.

In Davos, World Sees Trump The Pragmatist

January 28, 2018
Image may contain: 1 person, suit and text
No one was declaring President Donald Trump a changed man. Privately, executives and global leaders who had gathered in Davos continued to worry that the US president could yet indulge his worst instincts – and his penchant for shock on Twitter – to deliver a geopolitical crisis, open up a new front in trade hostilities or offend a vast group of people.
But a rough consensus emerged over Trump’s two-day visit that his administration had shown itself to be more pragmatic than advertised. Many were inclined to view the president’s most extreme positions as just aggressive bargaining postures. “I’m optimistic that, with other world leaders, most of these issues can be tackled in a productive way for the global economy and for global businesses.”
During the dinner, Trump made the rounds, stopping to ask executives how they plan to increase investment in the United States, according to attendees. In his speech, Trump took credit for a booming US stock market and strong economic growth, pointing to the regulations his administration has slashed, as well as the US$1.5 trillion (S$1.96 trillion) package of tax cuts he championed and navigated through Congress.
He left the impression that he was above all eager to woo foreign investment, as if he were leading some amped-up US Chamber of Commerce. “Over the past year, we have made extraordinary strides in the United States,” Trump said. “After years of stagnation, the United States is once again experiencing strong economic growth.”
Economists note that the US economy is into its ninth year of expansion, a trend that speaks to how the aftermath from the 2008 financial crisis has finally run its course. A surge of cash delivered by the Federal Reserve has stimulated commercial activity.
-AFP, Davos

Trump’s tax plan is working wonders (Capitalism works)

January 28, 2018

By Michael Goodwin
New York Post

January 27, 2018 | 8:21pm

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Not that they needed one, but progressive wing nuts and their fellow travelers are getting another reason to hate President Trump. He’s proving that capitalism works.

The president’s policies of cutting high taxes and excessive regulations are sparking a stock market surge and soaring economic confidence.

Each day brings announcements from companies ranging from Apple to Walmart that they are giving bonuses and pay hikes, adding new jobs and increasing their investments in America.

Millions of workers will get the bonuses, most of which are for $1,000, and untold others will get new or higher-paying jobs.

Most of those workers also will see their take-home pay increase because they will get personal income tax cuts and a doubling of the standard deduction. Those changes will become apparent in a week or so when the new lower rates are applied to payrolls.

The cash-in-the-pocket benefits are great news to many families, but the boom is doing something else too: It’s giving the millennials a firsthand bonuses,.

Following eight slow-growth years under President Barack Obama and an election where their favorite candidate, Bernie Sanders, railed against the wealthy and promised free stuff for everybody else, many young Americans were taught that socialism is their friend and capitalism their enemy.

Now they are getting proof that the opposite is true. They are eyewitnesses as capitalism provides more opportunities and financial security to more people than any other system.

If they still have doubts, they need only ask their parents about their swelling 401(k) and IRA accounts as a result of the Dow Jones’ 45 percent climb since Trump’s election.

All Democrats voted against the tax cuts and some refuse to celebrate the good results. House Minority Leader Nancy Pelosi called the bonuses “crumbs” and likened them to cheese on a mouse trap. Former party boss Debbie Wasserman Schultz told a crowd that “I’m not sure that $1,000 goes very far for almost anyone.”

Image result for Debbie Wasserman Schultz, 2018, photos

It’s hard not to conclude that Pelosi and her elitist ilk believe ­ever-higher taxes and redistribution are superior to growth fueled by the private sector. And that handouts are better than jobs. As Friedrich Hayek explained, central planners are always paving “The Road to Serfdom.”

In fact, government redistribution had its heyday under Obama, who raised taxes on upper incomes yet never stopped complaining that the rich didn’t pay their “fair share.”

He also piled up restrictions on business through environmental rules, ObamaCare and the Department of Labor, not to mention Dodd-Frank.

Those burdens strangled growth, both in terms of take-home pay and job creation. Obama was the first president never to have a whole year of 3 percent growth and had the lowest labor-participation rate in three decades.

The former president revealed his gut view of capitalism in a 2012 speech when he famously declared, “If you’ve got a business, you didn’t build that . . . somebody else made that happen.”

His point was that government built the roads, etc., which is obviously true, but misses the point that government has no money of its own.

It has to take it from the private sector, and when it takes too much, people pay the price through lost jobs and opportunity.

The contrast with Trump is striking. His “America is Open for Business” spiel at Davos was consistent with his promise to get the economy roaring. Never a shrinking violet, he is most convincingly authentic when cheerleading for jobs, jobs, jobs.

He starts his second year in office with the dividends piling up. As The Wall Street Journal reported Friday, the tax cuts are “rippling through” the economy and leading all kinds of firms to explore expansion and some to consider new plants and acquisitions.

Many companies also are increasing their charitable contributions, with JPMorgan Chase saying it will boost its community-based philanthropy by 40 percent, to $1.75 billion over five years. That, too, is unique to capitalism — people and businesses freely giving away their money.

According to the Journal, profits for most firms in the S&P 500 could rise by 7 to 8 percent per share, which is why they will spend more. That spending will lead to higher earnings for other companies as part of what one ­analyst called a “virtuous cycle.”

No one knows how far the expansion will go or how long it will last. But one thing is certain: Trump is the catalyst.

No other Republican who sought the presidency in 2016 had comparable plans to reduce regulations and taxes. And Democrat Hillary Clinton promised more of both while trying to match Sanders’ free-stuff promises.

The economy will figure heavily in the midterm elections, but won’t be the only factor. National security will matter and special counsel Robert Mueller’s investigation could have a huge impact.

But for now, the rising tide of capitalism is lifting all boats. Just as it always does when given a chance.

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.