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Archive for the ‘Donald Trump’ Category

I’ve written many times that Washington is both a corrupt city and a corrupting city. My point is that decent people go into government and all too often wind up losing their ethical values as they learn to “play the game.”

I often joke that these are people who start out thinking Washington is a cesspool but eventually decide it’s a hot tub.

During the presidential campaign, Trump said he wanted to “drain the swamp,” which is similar to my cesspool example. My concern is that El Presidente may not understand (or perhaps not even care) that shrinking the size and scope of government is the only effective way to reduce Washington corruption.

In any event, we’re soon going to get a very strong sign about whether Trump was serious. With Republicans on Capitol Hill divided on how to deal with this cronyist institution, Trump basically has the tie-breaking vote on the issue.

In other words, he has the power to shut down this geyser of corporate welfare. But will he?

According the Susan Ferrechio of the Washington Examiner, Trump may choose to wallow in the swamp rather than drain it.

President Trump now may be in favor of the Export-Import Bank, according to Republican lawmakers who met with him privately Thursday, even though Trump once condemned the bank as corporate welfare.

Veronique de Rugy of the Mercatus Center is one on the Ex-Im Bank’s most tenacious opponents, and she’s very worried.

…if the reports are true that Trump has decided to support the restoration of the crony Export-Import Bank’s full lending authority, it would be akin to the president deciding to instead happily bathe in the swamp and gargle the muck. …If true, the news is only “great” for Boeing, GE, and the other major recipients of Ex-Im’s corporate welfare. It is also at odds with his campaign promises since much of the way the program works is that it gives cheap loans — backed by Americans all over the country — to foreign companies in China, Russia, Saudi Arabia, and the UAE. Restoring Ex-Im’s full lending-authority powers is renewing the policy to give cheap loans backed by workers in the Rust Belt to companies like Ryanair ($4 billion in guarantee loans over ten years) and Emirates Airlines ($3.9 billion over ten years) so they can have a large competitive advantage over U.S. domestic airlines like Delta and United. It continued to subsidize the large and prosperous state-owned Mexican oil company PEMEX ($9.7 billion over ten years). Seriously? That’s president Trump’s vision of draining the swamp?

Ugh. It will be very disappointing if Trump chooses corporate welfare over taxpayers.

What presumably matters most, though, is whether a bad decision on the Ex-Im Bank is a deviation or a harbinger of four years of cronyism.

In other words, when the dust settles, will the net effect of Trump’s policies be a bigger swamp or smaller swamp?

The New York Times opined that Trump is basically replacing one set of insiders with another set of insiders, which implies a bigger swamp.

Mr. Trump may be out to challenge one establishment — the liberal elite — but he is installing one of his own, filled with tycoons, Wall Street heavyweights, cronies and a new rank of shadowy wealthy “advisers” unaccountable to anyone but him. …Take first the Goldman Sachs crowd. The Trump campaign lambasted global financiers, led by Goldman, as having “robbed our working class,” but here come two of the alleged miscreants: Gary Cohn, Goldman’s president, named to lead the National Economic Council, and Steven Mnuchin, named as Treasury secretary. …Standing in the rain during Mr. Trump’s inaugural speech, farmers and factory workers, truckers, nurses and housekeepers greeted his anti-establishment words by cheering “Drain the Swamp!” even as the new president was standing knee-deep in a swamp of his own.

I’m skeptical of Trump, and I’m waiting to see whether Gary Cohn and Steven Mnuchin will be friends for taxpayers, so I’m far from a cheerleader for the current administration.

But I also think the New York Times is jumping the gun.

Maybe Trump will be a swamp-wallowing cronyist, but we don’t yet have enough evidence (though a bad decision on Ex-Im certainly would be a very bad omen).

Here’s another potential indicator of what may happen to the swamp under Trump’s reign.

Bloomberg reports that two former Trump campaign officials, Corey Lewandowski and Barry Bennett have cashed in by setting up a lobbying firm to take advantage of their connections.

The arrival of a new president typically means a gold rush for Washington lobbyists as companies, foreign governments, and interest groups scramble for access and influence in the administration. Trump’s arrival promises to be different—at least according to Trump. Throughout the campaign, he lambasted the capital as a den of insider corruption and repeatedly vowed to “drain the swamp,” a phrase second only in the Trump lexicon to “make America great again.” …Trump’s well-advertised disdain for lobbying might seem to augur poorly for a firm seeking to peddle influence. …“Business,” Lewandowski says, “has been very, very good.”

This rubs me the wrong way. I don’t want lobbyists to get rich.

But, to be fair, not all lobbying is bad. Many industries hire “representation” because they want to protect themselves from taxes and regulation. And they have a constitutional right to “petition” the government and contribute money, so I definitely don’t want to criminalize lobbying.

But as I’ve said over and over again, I’d like a much smaller government so that interest groups don’t have an incentive to do either the right kind of lobbying (self-protection) or the wrong kind of lobbying (seeking to obtain unearned wealth via the coercive power of government).

Here’s one final story about the oleaginous nature of Washington.

Wells Fargo is giving a big payout to Elaine Chao, the new Secretary of Transportation.

Chao, who joined Wells Fargo as a board member in 2011, has collected deferred stock options —  a compensation perk generally designed as a long-term retention strategy — that she would not be able to cash out if she left the firm to work for a competitor. Her financial disclosure notes that she will receive a “cash payout for my deferred stock compensation” upon confirmation as Secretary of Transportation. The document discloses that the payments will continue throughout her time in government, if she is confirmed. The payouts will begin in July 2017 and continue yearly through 2021. But Wells Fargo, like several banks and defense contractors, provides a special clause in its standard executive employment contract that offers flexibility for awarding compensation if executives leave the bank to enter “government service.” Such clauses, critics say, are structured to incentivize the so-called “reverse revolving door” of private sector officials burrowing into government. …Golden parachutes for executives leaving firms to enter government dogged several Obama administration officials. Jack Lew, upon leaving Citigroup to join the Obama administration in 2009, was given a cash payout as part of his incentive and retention awards that wouldn’t have been paid if he had left the firm to join a competitor or under ordinary circumstances. But Lew’s Citigroup contract stipulated that there was an exception for leaving to work in a “full time high level position with the U.S. government or regulatory body.” Goldman Sachs, Morgan Stanley, and Northrop Grumman are among the other firms that have offered special financial rewards to executives who leave to enter government.

This rubs me the wrong way, just as it rubbed me the wrong way when one of Obama’s cabinet appointees got a similar payout.

But the more I think about it, the real question isn’t whether government officials get to keep stock options and other forms of deferred compensation when they jump to government.

What bothers me much more is why companies feel that it’s in their interest to hire people closely connected to government. What value did Jacob Lew bring to Citigroup? What value did Chao bring to Wells Fargo?

I suspect that the answer has a lot to do with financial institutions wanting people who can can pick up the phone and extract favors and information from senior officials in government.

For what it’s worth, I’m not a fan of Lew because he pushed for statism while at Treasury. By contrast, I am a fan of Chao because she was one of the few bright spots during the generally statist Bush years.

But I don’t want a system where private companies feel like they should hire either one of them simply because they have connections in Washington.

I hope that Trump will change this perverse set of incentives by “draining the swamp.” But unless he reduces the size and scope of government, the problem will get worse rather than better.

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One of the unfortunate features of Washington is that people often wind up in places that bring out their worst behaviors.

The classic example is Jack Kemp, who did great work as a member of Congress to push a supply-side agenda of low marginal tax rates and less double taxation. Indeed, it’s no exaggeration to say that the Reagan tax cuts were made possible by Kemp’s yeoman efforts. But when President George H.W. Bush brought Kemp into his cabinet back in 1989, it wasn’t to head up the Treasury Department. It was to be Secretary of Housing and Urban Development, a department that shouldn’t even exist. And because Kemp was weak on spending issues, he predictably and unfortunately presided over an expansion of HUD’s budget. If he was at Treasury, by contrast, he may have been able to stop Bush’s disastrous read-my-lips tax deal.

Another example is that Republicans members of Congress from farm states generally favor small government. So if they wind up on committees that deal with overall fiscal issues, they usually are allies in the effort to restrain Leviathan. Unfortunately, they more often wind up on the Agriculture Committee, which means they accumulate power and expertise in the area where they are least likely to favor free markets and limited government. They net effect is that  they may still have a decent voting record, but their actual impact on public policy will be harmful. The same thing happens with Republicans who get on the transportation committees.

Today’s example is Attorney General Jeff Sessions. When he was Chairman of the Senate Budget Committee, he was an ally in the fight against big government. He favored decentralization. He supported rolling back the welfare state. He favored entitlement reform. He supported tax cuts. He used his power and position to try to do the right thing. But when Trump asked Sessions to join his cabinet, it wasn’t to head the Office of Management and Budget, a position that would have been a good fit. Instead, Trump picked him to be Attorney General, which is problematical because Sessions is an advocate of the failed War on Drugs. And he’s also a supporter of “asset forfeiture,” which occurs when governments steal money and property from citizens without convicting them of any crime. Or sometimes without even charging them with a crime.

I’m not joking. This happens with distressing regularity. It’s called “policing for profit.”

In poor nations, a corrupt cop will stop motorists to shake them down for pocket change. In the United States, we’ve legalized a bigger version of that sleazy behavior. George Will shared a reprehensible example last December.

The Sourovelises’ son, who lived at home, was arrested for selling a small amount of drugs away from home. Soon there was a knock on their door by police who said, “We’re here to take your house” and “You’re going to be living on the street” and “We do this every day.” The Sourovelises’ doors were locked with screws and their utilities were cut off. They had paid off the mortgage on their $350,000 home, making it a tempting target for policing for profit. Nationwide, proceeds from sales of seized property (homes, cars, etc.) go to the seizers. And under a federal program, state and local law enforcement can partner with federal authorities in forfeiture and reap up to 80 percent of the proceeds. This is called — more Orwellian newspeak — “equitable sharing.” No crime had been committed in the Sourovelises’ house, but the title of the case against them was “Commonwealth of Pennsylvania v. 12011 Ferndale Street.” Somehow, a crime had been committed by the house. In civil forfeiture, it suffices that property is suspected of having been involved in a crime. Once seized, the property’s owners bear the burden of proving their property’s innocence.

The good news is that there’s a growing desire to stop governments from stealing.

Indeed, Will points out that there was “a 2015 Senate Judiciary Committee hearing on forfeiture abuses.”

Unfortunately, not everybody at the hearing agreed that it’s wrong for governments to arbitrarily engage in theft.

…one senator said “taking and seizing and forfeiting, through a government judicial process, illegal gains from criminal enterprises is not wrong,” and neither is law enforcement enriching itself from this. …this senator asserted an unverifiable number: “Ninety-five percent” of forfeitures involve people who have “done nothing in their lives but sell dope.” This senator said it should not be more difficult for “government to take money from a drug dealer than it is for a businessperson to defend themselves in a lawsuit.” In seizing property suspected of involvement in a crime, government “should not have a burden of proof higher than in a normal civil case.”

The Senator who made these statements was Jeff Sessions.

And, as George Will explains, the then-Senator missed a few points.

In civil forfeiture there usually is no proper “judicial process.” There is no way of knowing how many forfeitures involve criminals because the government takes property without even charging anyone with a crime. The government’s vast prosecutorial resources are one reason it properly bears the burden of proving criminal culpability “beyond a reasonable doubt.” A sued businessperson does not have assets taken until he or she has lost in a trial, whereas civil forfeiture takes property without a trial and the property owner must wage a protracted, complex, and expensive fight to get it returned.

The Wall Street Journal also opined about the new Attorney General’s indefensible position.

The all-too-common practice allows law enforcement to take private property without due process and has become a cash cow for state and local police and prosecutors. …Assets are often seized—and never returned—without any judicial process or court supervision. Unlike criminal forfeiture, civil forfeiture doesn’t require a criminal conviction or even charges. According to the Virginia-based Institute for Justice, which tracks forfeitures, 13% of all forfeitures done by the Justice Department between 1997 and 2013 were in criminal cases while 87% were civil forfeitures. And 88% of those forfeitures were done by an administrative agency, not a court. …The lack of procedural protection coupled with financial incentives has turned policing for profit into a slush fund for governments hungry for cash, and the payouts too often come at the expense of civil liberties. We’d like to hear what Mr. Sessions thinks of the practice today.

Sadly, it doesn’t appear that President Trump is on the right side either.

In a new column on the topic, George Will addresses this unfortunate development.

There is no reason for the sheriffs to want to reform a racket that lines their pockets. For the rest of us, strengthening the rule of law and eliminating moral hazard are each sufficient reasons. Civil forfeiture is the power to seize property suspected of being produced by, or involved in, crime. If property is suspected of being involved in criminal activity, law enforcement can seize it. Once seized, the property’s owners bear the burden of proving that they were not involved in such activity, which can be a costly and protracted procedure. So, civil forfeiture proceeds on the guilty-until-proven-innocent principle. Civil forfeiture forces property owners, often people of modest means, to hire lawyers and do battle against a government with unlimited resources. And here is why the sheriffs probably purred contentedly when Trump endorsed civil forfeiture law — if something so devoid of due process can be dignified as law: Predatory law enforcement agencies can pocket the proceeds from the sale of property they seize.

The folks at Reason have a new video on Trump’s support for theft-by-government.

By the way, I hold out some hope that Trump may not be completely bad on the issue. It’s possible that he’s never considered the issue and doesn’t understand that it involves over-the-top government thuggery. He may simply think it’s some sort of procedural issue involving good cops against bad crooks.

So perhaps when he is briefed on what the issue really means, he’ll be in favor of protecting Americans from the kind of horrible abuse that the Dehko family experienced. Or the mistreatment of Carole Hinders. Or the ransacking of Joseph Rivers. Or the brutalization of Thomas Williams.

I could continue, but I think you get the point.

Let’s close, though, with some good news. I wrote two years ago about the case of Charles Clarke, who had $11,000 that was stolen by government. Thanks to the Institute for Justice, that stolen money has been returned.

Charles Clarke, the college student who was robbed of $11,000 in cash by cops at the Cincinnati/Northern Kentucky International Airport two years ago, will get his money back with interest under an agreement he reached with the Justice Department this week. …To keep the money, the government theoretically had to show that it more likely than not came from selling drugs or was intended to buy them. But that burden applied only if Clarke had the means to challenge the forfeiture once the government had taken his savings. Innocent owners often find that standing up for their rights costs more than the value of the property they are trying to get back. Luckily for Clarke, he had the Institute for Justice in his corner.

And the other bit of good news is that New Mexico has curtailed the disgusting practice of asset forfeiture. Hopefully Trump won’t try to destroy the careers of the lawmakers who decided the Constitution was more important than lining the pockets of the bureaucracy.

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Back in the 1980s, I would get very agitated when folks made excuses for brutal communist regimes by asserting that the United States also did bad things. This “moral equivalence” argument is now being recycled by Donald Trump, who basically excuses Putin’s brutality because America supposedly isn’t in any position to throw stones.

Here’s the interview, set to start at the point where Trump discusses Putin.

This is wrong. Absurdly wrong.

Though let’s start by acknowledging that the United States is far from perfect. Our history includes black eyes such as slavery, mistreatment of native populations, incomplete legal rights for women, internment of Japanese-Americans, Jim Crow laws, persecution of gays, and other sins.

Even today, we have plenty of bad policies that restrict human liberty, often exacerbated by examples of thuggish actions by government.

But, at the risk of sounding jingoistic and patriotic, the United States began with a wonderful set of ideals and our history largely reflects a struggle to extend those ideals to the entire population.

Now let’s look at Putin.

When I tweeted my column about Russia’s flat tax two days ago, I screwed up by making a joke about the Trump-Putin “bro-mance.” I got savaged on Twitter by people who accused me of somehow endorsing (or at least accepting) the many repressive policies that exist in Russia.

The silver lining to Trump’s disturbing interview is that it gives me an opportunity to make clear my disapproval of both Putin and the silly doctrine of moral equivalence.

With regards to Russia’s president, do we have any reason to believe that he is motivated by the principles of classical liberalism? Does anyone think he wants to make Russia a free society? That he respects human rights and the rule of law?

Heck, even Trump didn’t dispute the premise that he’s a killer.

Moreover, how can anyone believe in moral equivalence when there’s a huge gap between the United States and Russia on measures of liberty.

Consider, for instance, the Human Freedom Index. As you can see, the United States is far from perfect. We’re ranked #23 for overall freedom, #28 for personal freedom, and #16 for economic freedom.

But we look good compared to Russia, which is #115 for overall freedom, #110 for personal freedom, and #102 for economic freedom.

And the Freedom House rankings show an equally dramatic difference.

The United States has a score of 90 on a 0-100 scale, with the highest rating for political rights and civil liberties.

Russia, by contrast, only has a score of 22 and gets the next-to-last rating for political rights and civil liberties.

To conclude, some folks sometimes say the continuing imperfections in the United States mean that there’s only a “difference in degree” between us and Russia.

My response is that if the “difference in degree” is large, then you also have a “difference in kind.”

There is no moral equivalence.

P.S. On a separate topic, you won’t be surprised by this report from the Washington Times.

More than half of IRS employees found to have intentionally cheated on their taxes last year were allowed to keep their jobs, according to numbers released by the inspector general that suggest the agency is still reluctant to punish its own staffers for breaking tax laws.

Yet another example of hypocrisy in government. I’ve noted the IRS has thieving employees, incompetent employees, thuggish employees, brainless employees, protectionist employees, wasteful employees, and victimizing employees. Now it has slapped-on-the-hand employees.

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Donald Trump should be an easy target for political humorists, but I’ve mostly been disappointed in the quality of the anti-Trump satire.

That may be because comedians think he’s a raging conservative, so their jokes based on that theme strike someone like me (who fears Trump is a big-government populist) as senseless.

After all, clever humor should take something true and then mock it by taking it to an absurd extreme. Indeed, this is why I can appreciate even anti-libertarian humor if it’s well done.

Fortunately, we have foreigners who are willing to do the job that American humorists won’t do. Beginning with the Netherlands (from what I can tell), some clever people in other nations have produced videos “welcoming” Trump.

Here’s the Dutch version.

The Danes also got into the game.

And since I’m a big fan of Switzerland, I obviously can’t resist sharing the Swiss version.

And the German contribution links Trump to the former head of the National Socialist Workers Party.

Last but not least, the Belgians get into the act.

By the way, there are many other examples for anyone who wants to kill some time seeing how other nations introduce themselves to Trump. Just do a search on YouTube.

Meanwhile, we presumably remember how the Obama Administration wanted to seize our guns. In the same spirit, the Onion has an amusing look at how the Trump Administration wants to take away our facts.

Alarmed at the prospect of unconstitutional overreach by the Trump administration, millions of fearful Americans have already begun stockpiling facts before the federal government comes to take them away, sources confirmed Friday. “I know my rights as an American, so you’d better believe I’m getting my hands on as many facts as possible and keeping them somewhere safe where this First Amendment–hating president of ours can’t snatch them all up,” said Pittsburgh resident David Edelman, 38, adding that he was worried that President Trump planned to not only suspend production of facts, but also seize existing ones, leaving Americans and their families completely defenseless. …A spokesperson for the Trump administration dismissed such fears, saying that the president merely wanted to keep facts away from certain dangerous people.

The videos and the article from the Onion are good additions to my sparse collection of Trump humor. Previous examples can be seen here, here, here, here, and here.

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I was sitting directly under a television in a Caribbean airport yesterday when Trump got inaugurated, so I inadvertently heard his speech.

The bad news is that Trump didn’t say much about liberty or the Constitution. And, unlike Reagan, he certainly didn’t have much to say about shrinking the size and scope of Washington.

On the other hand, he excoriated Washington insiders for lining their pockets at the expense of the overall nation. And if he’s serious about curtailing sleaze in DC, the only solution is smaller government.

But is that what Trump really believes? Does he intend to move policy in the right direction?

Well, as I’ve already confessed, I don’t know what to expect. The biggest wild card, at least for fiscal policy, is whether he’ll be serious about the problem of government spending. Especially entitlements.

I’ve been advising the Trump people that he needs some genuine spending restraint (or even some semi-serious spending restraint) if he actually wants to enact his big tax cut and have it be durable. And I’ve also been reminding them that Reagan’s 1984 landslide was in part a reward for having implemented policies that triggered strong growth.

However, I gave that same advice to Bush’s people last decade and they didn’t listen, so I’m not overflowing with optimism that I’ll have more luck this time around.

But hope springs eternal, so I’m starting the Trump era with my fingers crossed that we’ll get some good reform and good results. I talk about these issues in this interview with Dana Loesch.

If I can elaborate on a couple of points from the interview, I am especially interested to see whether Republicans can actually deliver a big reduction in the corporate tax rate. Trump wants 15 percent, which would be great. House Republicans have proposed 20 percent, which also would be a big shift in the right direction.

But there are a lot of details to be addressed before a big fiscal package can be approved, including whether Trump will do something to control spending and also how he will deal with the controversial provision on border adjustability in the House plan.

Regarding employment, I mentioned that we have the good news of a lower unemployment rate combined with the bad news of too many people out of the labor force.

I shared my views on this issue for a story in USA Today.

The share of Americans working or looking for jobs is near historic lows. About 10 million prime-age men aren’t in the labor force — a lingering casualty of the Great Recession. Wage increases were stagnant at about 2% for most of the 7 ½-year-old recovery. “Several million people are not earning income, not producing,” says Dan Mitchell, senior fellow at the conservative Cato Institute. “I don’t think it’s good for the economy and it’s not good for those people.” Mitchell at least partly blames the substantial increase in the disability and food stamp rolls during and after the recession, which he says encouraged some Americans to remain idle. “We’ve expanded the welfare state,” he says.

At the risk of stating the obvious, fewer people work when you increase the benefits of not working.

Last but not least, I will confess a sin of omission. Dana mentioned the uptick in consumer spending over the holidays. That’s an important economic indicator, to be sure, but I should have taken the opportunity to explain that consumer spending and consumer sentiments are symptoms of an improving economy rather than causes of an improving economy. The focus of policy should be on how to produce higher incomes, not on how existing income is allocated.

P.S. Speaking of sins of omission, I missed an important point earlier this month in my column on Obama’s legacy. Fortunately, Ramesh Ponnuru of National Review picked up the ball with the very important point that Obama utterly failed in his desire to be a Reagan-type transformational President.

Obama…wanted to be the liberal Reagan, or rather the liberal anti-Reagan: the person who pulled American politics back to the left a generation after Reagan pulled it to the right. …the Obama project has failed. He did manage to pull his own party to the left. …On criminal justice, on entitlements, on immigration, on abortion, on religious liberty, Democrats staked out positions and adopted rhetoric that were much less moderate than they had previously been. …The Democratic strategy of the Obama years has left the party locked out of power in the White House, the Senate, and the House… At no point in Obama’s presidency did his political success make Republicans consider assimilating some of his views into their philosophy, as Bill Clinton had done with Reaganism. Republicans are even less likely to make such an adjustment now. …it is clear enough already that Obama is no Reagan.

Which gives me another opportunity to call attention to the best poll of the past eight years.

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Because of what he’s said on entitlements, infrastructure, child care, and other issues, I’ve been skeptical about Donald Trump.

But if recent headlines are true, I may develop a man crush.

Here’s a story from The Hill.

Donald Trump is ready to take an ax to government spending. Staffers for the Trump transition team have been meeting with career staff at the White House ahead of Friday’s presidential inauguration to outline their plans for shrinking the federal bureaucracy, The Hill has learned. The changes they propose are dramatic. The departments of Commerce and Energy would see major reductions in funding, with programs under their jurisdiction either being eliminated or transferred to other agencies. The departments of Transportation, Justice and State would see significant cuts and program eliminations. The Corporation for Public Broadcasting would be privatized, while the National Endowment for the Arts and National Endowment for the Humanities would be eliminated entirely. Overall, the blueprint being used by Trump’s team would reduce federal spending by $10.5 trillion over 10 years. …At the Department of Justice, the blueprint calls for eliminating the Office of Community Oriented Policing Services, Violence Against Women Grants and the Legal Services Corporation and for reducing funding for its Civil Rights and its Environment and Natural Resources divisions. At the Department of Energy, it would…eliminate the Office of Electricity, eliminate the Office of Energy Efficiency and Renewable Energy and scrap the Office of Fossil Energy, which focuses on technologies to reduce carbon dioxide emissions. Under the State Department’s jurisdiction, funding for the Overseas Private Investment Corporation, the Paris Climate Change Agreement and the United Nations’ Intergovernmental Panel on Climate Change are candidates for elimination.

This warms my heart. It might even send a thrill up my leg, to borrow a phrase from Chris Matthews.

But that’s not all.

The Washington Examiner also has a report that has me salivating.

Making good on a promise to slash government, President-elect Trump has asked his incoming team to pursue spending and staffing cuts. Insiders said that the spending reductions in some departments could go as high as 10 percent and staff cuts to 20 percent, numbers that would rock Washington if he follows through. At least two so-called “landing teams” in Cabinet agencies have relayed the call for cuts as part of their marching orders to shrink the flab in government. …The teams also are looking at staffing cuts over four years through attrition, a hiring freeze and reorganization. The plan is winning cheers in conservative, anti-tax and anti-spending corners in Washington that have long sought massive cuts in the bureaucracy. …Trump is likely to face a wall of opposition from Democrats and federal unions who consider much of the federal workforce on their side.

Sounds great, right?

But before getting too excited, keep in mind that these articles simply refer to options that Trump’s team is preparing. It’s still an open question whether Trump actually embraces these policies.

So my man crush is on hold until I see whether Trump actually decides to do what’s right for the nation.

But if he does, I have some very helpful three-part advice for successful fiscal policy.

  1. The budget is a garden.
  2. Counterproductive agencies, programs, and departments are like weeds in the garden.
  3. Don’t trim weeds, pull them out by the roots.

In other words, don’t cut programs by 10 percent, 20 percent, or even 50 percent. If you do that, it’s like cutting off a weed at ground level. If the root system is still there, it’s just a matter of time before it regrows and begins to suffocate the good plants (i.e., the private sector).

Instead, shut them down. Eliminate them. Raze the buildings. And pour a foot of salt on the ground so nothing can regrow.

Simply stated, it’s very easy to restore a budget cut at some point in the future. But if a part of government is totally wiped out, then special interests have to go through all the effort of recreating that function. And that’s not overly easy given the separation-of-powers system that the Founding Fathers wisely created.

Another advantage of killing off programs and agencies is that voters will see that they were never needed in the first place.

Get rid of the National Endowment for the Arts and people will quickly see that the hysterical claims of its supporters were nonsense.

Shut down the Department of Commerce and, other than cronyists, folks won’t even notice that it’s gone.

Cut off all funding for the Organization for Economic Cooperation and Development and the only losers will be the bureaucrats who no longer get to enjoy business-class junkets to Paris.

I’ve already identified several cabinet departments that should be terminated.

  • Get rid of the Department of Housing and Urban Development.
  • Shut down the Department of Agriculture.
  • Eliminate the Department of Transportation.
  • Abolish the Department of Education.
  • Pull the plug on the Department of Energy.
  • Phase out the Department of Veterans Affairs.
  • Dump the Small Business Administration.

John Stossel also has a bunch of suggestions for Trump’s first week.

…there’s a lot of good Trump and Pence could do their first day, or, let’s be generous, their first week. …Monday: Abolish the Department of Commerce. …Commerce just happens; it doesn’t need a department. Today the Department of Commerce spends $9 billion a year subsidizing companies with political connections, gathering economic data, setting industry standards and doing a bunch of things companies ought to do for themselves. Get rid of it. Tuesday: Abolish the Department of Labor. The Department inserts itself into almost every protracted argument between workers and management. Why should we let government referee every argument? Let workers, bosses, unions and their lawyers fight it out. …The Labor Department also spends about $9 billion gathering information on workers. Top labor-union bosses make six-figure salaries. I’m sure their organizations could spend a little on statistics and workplace studies. Leave the poor, oppressed taxpayer out of it.

For the rest of the week, he suggests wiping out the Small Business Administration, the Department of Education, and the Department of Energy, so you can see we’re on the same wavelength.

The bottom line is that President Trump (I didn’t think I’d ever write those words) is in a position to…um, well…make America great again.

But that means pursuing a fiscal policy consistent with America’s founding principles.

I’m not expecting miracles, but it would be nice to see some semi-serious spending restraint when the dust settles. And any good results will be much more durable if they’re based on program terminations instead of haircuts.

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In the world of tax policy, there’s an intense debate about the “border-adjustable” provision that is part of the tax plan put forth by House Republicans, which basically would tax imports and exempt revenues generated by exports.

It’s a bit wonky, but the simplest explanation is that GOPers want to replace the current corporate income tax with a “destination-based cash flow tax” (DBCFT) that would – for all intents and purposes – tax what is consumed in the United States rather than what is produced in the United States.

I’m very sympathetic to what Republicans are trying to accomplish, particularly their desire to eliminate the tax bias against income that is saved and invested. But I greatly prefer the version of consumption-base taxation found in the flat tax.

My previous columns on the plan have highlighted the following concerns.

  • Left-leaning advocates like “destination-based” tax systems such as the DBCFT because such systems undermine tax competition and give politicians more ability to increase tax rates.
  • The “border adjustability” in the plan is contrary to the rules of the World Trade Organization (WTO) and there’s a significant risk that politicians might try to “fix” the plan by turning it into a value-added tax.

Here’s what I said about the proposal in a recent interview for CNBC.

This provision is not in Trump’s plan, but I’ve been acting on the assumption that the soon-to-be President eventually would embrace the Better Way Plan simply because it presumably would appeal to his protectionist sentiments.

So I’m quite surprised that he’s just poured cold water on the plan. Here are some excerpts from a report in the Wall Street Journal.

President-elect Donald Trump criticized a cornerstone of House Republicans’ corporate-tax plan… The measure, known as border adjustment, would tax imports and exempt exports as part of a broader plan to encourage companies to locate jobs and production in the U.S. But Mr. Trump, in his first comments on the subject, called it “too complicated.” “Anytime I hear border adjustment, I don’t love it,” Mr. Trump said in an interview with The Wall Street Journal on Friday. …Retailers and oil refiners have lined up against the measure, warning it would drive up their tax bills and force them to raise prices because they rely so heavily on imported goods.

If we read between the lines, it appears that Trump may be more knowledgeable about policy than people think.

Proponents of the Better Way Plan sometimes use protectionist-sounding rhetoric to sell the plan (e.g., taxing imports, exempting exports), but they argue that it’s not really protectionist because the dollar will become more valuable.

But Trump apparently understands this nuance and doesn’t like that outcome.

Independent analyses of the Republican tax plan say it would lead the dollar to appreciate further—which would lower the cost of imported goods, offsetting the effects of the tax on retailers and others. In his interview with the Journal on Friday, Mr. Trump said the U.S. dollar was already “too strong” in part because China holds down its currency, the yuan. “Our companies can’t compete with them now because our currency is too strong. And it’s killing us.”

I don’t agree with Trump about trade deficits (which, after all, are mostly the result of foreigners wanting to invest in the American economy), but that’s a separate issue.

When I talk to policy makers and journalists about this issue, one of the most common questions is why the DBCFT would cause the dollar to rise.

In a column for the Wall Street Journal, Martin Feldstein addresses that topic.

…as every student of economics learns, a country’s trade deficit depends only on the difference between total investment in the country and the saving done by its households, businesses and government. This textbook rule that “imports minus exports equals investment minus savings” is not a theory or a statistical regularity but a basic national income accounting identity that holds for every country in every year. That holds because a rise in a country’s investment without an equal rise in saving means that it must import more or export less. Since a border tax adjustment wouldn’t change U.S. national saving or investment, it cannot change the size of the trade deficit. To preserve that original trade balance, the exchange rate of the dollar must adjust to bring the prices of U.S. imports and exports back to the values that would prevail without the border tax adjustment. With a 20% corporate tax rate, that means that the value of the dollar must rise by 25%.

This is a reasonable description, though keep in mind that there are lots of factors that drive exchange rates, so I understand why importers are very nervous about the proposal.

By the way, Feldstein makes one point that rubs me the wrong way.

The tax plan developed by the House Republicans is similar in many ways to President-elect Trump’s plan but has one additional favorable feature—a border tax adjustment that exempts exports and taxes imports. This would give the U.S. the benefit that other countries obtain from a value-added tax (VAT) but without imposing that extra levy on domestic transactions.

The first sentence of the excerpt is correct, but not the second one. A value-added tax does not give nations any sort of trade benefit. Yes, that kind of tax generally is “border adjustable” under WTO rules, but as I’ve previously noted, that doesn’t give foreign production an advantage over American production.

Here’s some of what I wrote about this issue last year.

For mercantilists worried about trade deficits, “border adjustability” is seen as a positive feature. But not only are they wrong on trade, they do not understand how a VAT works. …Under current law, American goods sold in America do not pay a VAT, but neither do German-produced goods that are sold in America. Likewise, any American-produced goods sold in Germany are hit be a VAT, but so are German-produced goods. In other words, there is a level playing field. The only difference is that German politicians seize a greater share of people’s income. So what happens if America adopts a VAT? The German government continues to tax American-produced goods in Germany, just as it taxes German-produced goods sold in Germany. …In the United States, there is a similar story. There is now a tax on imports, including imports from Germany. But there is an identical tax on domestically-produced goods. And since the playing field remains level, protectionists will be disappointed. The only winners will be politicians since they have more money to spend.

If you want more information, I also discuss the trade impact of a VAT in this video.

For what it’s worth, even Paul Krugman agrees with me on this point.

P.S. It is a good idea to have a “consumption-base” tax (which is a public finance term for a system that doesn’t disproportionately penalize income that is saved and invested). But it’s important to understand that border adjustability is not necessary to achieve that goal. The flat tax is the gold standard of tax reform and it also is a consumption-based tax. The difference is that the flat tax is an “origin-based” tax and the House plan is a “destination-based” tax.

P.P.S. Speaking of which, proponents of the so-called Marketplace Fairness Act are using a destination-based scheme in hopes of creating a nationwide sales tax cartel so that states with high rates can make it much harder for consumers to buy goods and services where tax rates are lower.

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