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Posts Tagged ‘Donald Trump’

When I did my final assessment of Trump’s economic record, I gave him credit for cutting red tape in some areas, but also noted that he increased government intervention in other areas.

…there were some very positive moves on regulation, but they were partly offset by areas where Trump increased intervention (coal subsidies, property rights, Fannie/Freddie, and international tax rules, for instance).

I did give him credit, on net, for moving regulatory policy in the right direction. In other words, the good things he did regarding red tape outweighed the bad things.

But that’s a judgement call, in part because it’s rather difficult to measure the myriad forms of regulation from dozens of different bureaucracies, but also because there’s no agreement on how to measure success (is it a victory, for instance, to reduce the rate of increase in red tape?).

To see how this is challenging, let’s see what various experts wrote about Trump’s regulatory track record.

A new study, authored by Professors Cary Coglianese, Natasha Sarin, and Stuart Shapiro, pours cold water on Trump’s claim that he successfully reduced economic intervention.

Both the extent and impact of the Administration’s efforts to eliminate regulation are considerably less substantial than President Trump and his supporters have claimed. …We recognize that the Trump Administration has repealed or modified a series of agency regulations adopted under the Obama Administration, and even that the Administration has adopted a smaller number of new regulations deemed significant than other recent administrations. Yet overall the reality of regulatory elimination is rather unremarkable… The Administration has accomplished markedly little compared to what it has claimed. … in measuring levels of regulatory activity,researchers rely on a variety of sources of data, including overall pages in the Federal Register and the CFR,the incidence of new rules published in the Federal Register,and the number of actions listed in the semi-annual regulatory agenda. …The Code of Federal Regulations (CFR) is the authoritative source of all existing regulatory requirements on the books. …Growth continued in the Obama Administration to 185,053 pages in 2016. If President Trump’s claim to have eliminated 25,000 pages were correct, we would expect to see no more than160,000 pages in the CFR by now. But, quite to the contrary, the count as of the end of 2019 was185,984 pages—actually a somewhat greater number of pages, not fewer.

Here’s Figure 1 from the paper, which does confirm that there was not a 25,000-page reduction in red tape.

Though if you focus on the last couple of years, it is obvious that the rate of increase slowed significantly. Depending on one’s perspective, that is either a victory or a smaller defeat.

The authors do acknowledge that the number of pages isn’t even the right way to measure regulatory burden.

So they then examine the claim that the Trump Administration had more initiatives to reduce rather than increase red tape.

A count of pages in the CFR is only an indirect proxy for regulatory obligations. …Another way to look at what the Trump Administration has done by way of deregulation would be to look not at pages but at the number of actual rules. …Although the President and his supporters have claimed various levels of deregulatory activity—from 7 to 22 rules removed for every new rule added—these claims are false or misleading. …The lists overcount deregulatory actions by including withdrawals of proposals that were never finalized, delays in effective dates which do not eliminate regulations, non-regulatory actions such as the repeal of guidance documents, and even proposed deregulatory actions rather than completed ones. In addition, when comparing deregulatory actions to regulatory ones, the White House only counts new regulations designated as “significant,” while they count deregulatory actions of any magnitude or level of significance… rather than there being more deregulatory actions than other actions, as the Trump Administration’s claims have implied, there was, in fact, just the opposite. Overall about three completed actions in the regulatory agenda appear for every action designated as deregulatory.

The bottom line, based on their assessment, is that Trump didn’t accomplish much, particularly when compared to what happened under Carter and Clinton.

…in terms of“dramatic regulatory relief,” nothing the Trump Administration has done compares to the deregulation of the airlines, rail, and truck transportation that was executed by the Carter Administration in the late 1970s. Prior to that time, these major sectors of the economy—along with others, such as natural gas and telecommunications—were subject to regulations of prices and outputs—an inefficient form of regulation that advantaged incumbent firms but at the expense of consumers. President Carter championed major deregulatory initiatives that loosened the government restrictions on the air, rail, and transport sectors.Retrospective analysis indicates that the deregulation of these industries resulted in $70 billion in annual consumer benefits. …the evidence does not support the Trump Administration’s claims to have engaged in a dramatic scaling back of government regulation. More pages were removed from the CFR in the Clinton Administration than the Trump Administration. A more substantial unleashing of market forces occurred from the deregulatory changes made in the Carter Administration. And the Trump Administration has done at least as much regulating as it has deregulating.

For what it’s worth, Clinton was much more market oriented than most people realize. And Carter, while misguided in some areas, did a very good job on regulation.

So it’s not necessarily a knock on Trump to say he fell short of those two presidents.

Now let’s look at a pro-Trump perspective.

Professor Casey Mulligan of the University of Chicago early last year offered an upbeat assessment of the former president’s performance in tackling regulations.

In just three years the administration has reversed hundreds of regulations, many of which drone on for hundreds of pages. …Many of the regulations reversed had been written and implemented at the behest of special interests, including large banks, trial lawyers, major health insurance companies, big tech companies, labor unions, and foreign drug manufacturers. …the Council of Economic Advisers (CEA)…dedicated a great deal of manpower preparing a comprehensive and rigorous assessment of deregulation since 2017. That report, released in June, concluded that the past three years of deregulation is comparable to, and probably exceeds, any deregulatory episode in modern U.S. history. …the CEA report estimates that over the next five to 10 years, the deregulatory efforts of the Trump administration will increase annual real incomes in the United States by $3,100 per household.

I wrote about the above-mentioned report from the CEA in the summer of 2019. The CEA’s goal was to present Trump’s policies favorably, so I certainly don’t object to some skepticism from outsiders, but I also noted that, “the underlying assumptions aren’t overly aggressive” and “even modest improvements in growth lead to meaningful income gains over time.”

In a column for the Hill, James Broughel of the Mercatus Center analyzed Trump’s track record and concluded that some good things happened.

…the president issued Executive Order 13,771 soon after taking office. Its “2 for 1” requirement received the most attention: Two regulations must be identified for elimination each time a new one is put forward. However, perhaps more important is the “regulatory budget” it set up, which essentially set a cap on new regulatory costs executive branch agencies can impose. …A look at the data suggests the cap is largely working. On Jan. 20, 2017 — Trump’s inauguration day — there were 1,079,601 regulatory restrictions on the books. By Dec. 6, 2019, that number stood at 1,077,822. While the code has not declined substantially by this measure — and the administration should acknowledge that aggregate cuts to-date have been modest — it’s rare to see a code fail to grow across an entire presidential term.

Incidentally, the Mercatus measure of “regulatory restrictions” almost certainly is better than other measures of red tape, so it’s disappointing that Coglianese, Sarin, and Shapiro failed to include it in their analysis.

But if we’re simply looking at the volume of “significant rules,” here’s a tweet from James Pethokoukis showing that the increase in red tape dramatically slowed once Trump took over.

Philip Wallach of the R Street Institute examined Trump’s track record on red tape in an article for National Review in late 2019 and he thought the glass was half empty rather than half full.

Regulation became one area where conservatives wary of Trump allowed themselves high hopes. Trump’s experiences as a developer left him with a bone-deep skepticism of regulations. …There have been some real bright spots for deregulators. Many of the Obama administration’s aggressive and legally dubious environmental rules have been stalled or rolled back, including the Waters of the United States rule, Corporate Average Fuel Economy standards for tailpipe emissions, and the Clean Power Plan, which regulated greenhouse-gas emissions from existing power plants. The Endangered Species Act will be interpreted so as to make it less burdensome. Promises to scrap Obamacare may have gone unfulfilled, but the administration has quietly and constructively made the program more flexible for states and individuals. …the Trump administration…to an unprecedented degree…has…issu[ed] far fewer new regulations than any of its predecessors.

As you can see, it’s important to define success. Is it a victory to have “far fewer new regulations”?

Or, as you can see in the following excerpt from Wallach’s article, is it a victory to cut red tape by less than Obama increased it?

These triumphs notwithstanding, three years in, hopes of a thoroughgoing overhaul have been dashed. …hitting the pause button, however unusual, does not a revolution make. The hoped-for transformation of the administrative state is nowhere to be found. …In 2018, the administration sought to show its relative merit by noting that, through its first two years, the Obama administration had imposed $245 billion in regulatory costs. The Trump administration’s negative $33 billion in costs imposed at that point certainly was a lot less than $245 billion. But the comparison cuts harder in the other direction: The administration is admitting that it is coming nowhere close to reversing the costs imposed even by the Obama administration — let alone the decades of regulatory burdens built up previously. …the administration’s math allows it to take credit for deregulatory policies as soon as they are promulgated, without paying any attention to whether they are carried through. …the administrative state has been more discomfited than deconstructed by the Trump administration.

Last but not least, former Obama official Cass Sunstein opined for Bloomberg back in 2018 that Trump’s main achievement was to slow the tide of new regulations.

Is President Donald Trump dismantling the regulatory state? Not close. …let’s take a broader perspective. Under George W. Bush, the Office of Information and Regulatory Affairs approved about 2,500 final regulations. Under Barack Obama, it approved about 2,100 final regulations. …By comparison, the Trump administration has repealed … dozens of finalized regulations. …about 2 percent of the number of regulations finalized over the past 16 years. …Much more fundamentally, he’s substantially slowed the flow of new ones. …From Bush’s inauguration to Sept. 1, 2002, the Office of Information and Regulatory Affairs approved about 400 proposed regulations and about 500 final regulations. From Obama’s inauguration to Sept. 1, 2010, the Office of Information and Regulatory Affairs approved about 270 proposed regulations and about 470 final regulations. …the Bush and Obama administrations look pretty similar… The Trump administration is a big outlier. From Trump’s inauguration to the present, the Office of Information and Regulatory Affairs approved about 170 proposed regulations and about 160 final regulations. That’s a major reduction.

So what’s my two cents?

The obvious conclusion is that the Trump Administration did some good things to ease the nation’s regulatory burden, but there was no major paradigm shift.

The United States had a lot of red tape when Trump took office and it had a lot of red tape when Trump left office, though he definitely slowed the rate of increase.

But a slower rate of increase is still not good news, as illustrated by the fact that the Fraser Institute calculates that America’s score on red tape has declined slightly since 2016.

Indeed, the overall score for economic liberty in the United States has declined slightly since Obama left office, which is evidence for my argument that Trump delivered an incoherent mix of good policies (taxes, for instance) and bad policies (trade, for instance).

P.S. Trump’s Jekyll-Hyde record on economic policy is one of the reasons why I prefer Reaganism over Trumpism. The establishment doesn’t like either of those options, but I very much prefer the one that unambiguously reduces the size and scope of government.

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The 21st century has been bad news for proponents of limited government. Bush was a big spender, Obama was a big spender, Trump was a big spender, and now Biden also wants to buy votes with other people’s money.

That’s the bad news.

The good news is that there is still a simple solution to America’s fiscal problems. According to the just-released Budget and Economic Outlook from the Congressional Budget Office, tax revenues will grow by an average of 4.2 percent over the next decade. So we can make progress, as illustrated by this chart, if there’s some sort of spending cap so that outlays grow at a slower pace.

The ideal fiscal goal should be reducing the size of government, ideally down to the level envisioned by America’s Founders.

But even if we have more modest aspirations (avoiding future tax increases, avoiding a future debt crisis), it’s worth noting how modest spending restraint generates powerful results in a short period of time. And the figures in the chart assume the spending restraint doesn’t even start until the 2023 fiscal year.

The main takeaway is that the budget could be balanced by 2031 if spending grows by 1.5 percent per year.

But progress is possible so long as the cap limits spending so that it grows by less than 4.2 percent annually. The greater the restraint, of course, the quicker the progress.

In other words, there’s no need to capitulate to tax increases (which, in any event, almost certainly would make a bad situation worse).

P.S. The solution to our fiscal problem is simple, but that doesn’t mean it will be easy. Long-run spending restraint inevitably will require genuine reform to deal with the entitlement crisis. Given the insights of “public choice” theory, it will be a challenge to find politicians willing to save the nation.

P.P.S. Here are real-world examples of nations that made rapid progress with spending restraint.

P.P.P.S. Switzerland and Hong Kong (as well as Colorado) have constitutional spending caps, which would be the ideal approach.

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I rarely write about media bias, but I sometimes come across stories that cry out for correction because of blatant inaccuracies.

We’re going to add to the list today.

In a story for the Washington Post, Tracy Jan (aided by Seung Min Kim and Emily Guskin) argue that the Trump’s policies were bad news for African Americans.

Black voters overwhelmingly chose Biden, with 87 percent casting their ballots for him… Trump presided over the most unequal recession in modern American history because of his mismanagement of the coronavirus pandemic. …Economists say that rather than champion economic policies targeting average Black Americans, who are more likely to work low-wage jobs without health and retirement benefits, Trump’s annual budgets proposed eviscerating the social safety net, with cuts to housing, food stamps and health care.

I have two minor comments and one major comment.

The first minor comment is that Trump never proposed to eviscerate the so-called social safety net. Indeed, he increased domestic spending faster than Obama.

The second minor comment is that the recession was caused by the coronavirus, not by Trump’s policies.

The major comment is that Ms. Jan and her two colleagues wrote a lengthy story (more than 2,000 words) and never once mentioned or acknowledged that the black poverty rate fell to a record low during the Trump years.

Or that median household income for blacks rose to a record high.

This is a shocking level of journalistic malpractice. Sort of like writing about the Cold War without ever mentioning the Soviet Union.

By the way, I’m not saying that a pro-Trump spin was needed. They could have written about the poverty and income data and offered alternative explanations for why there were good numbers.

Heck, that’s what I did.

To be fair, the article does acknowledge that unemployment rate for African Americans fell to a record low during the Trump years.

…the Black unemployment rate’s record low average of 6.1 percent over 2019 — a steady improvement that had begun during the Obama administration — remained double that of Whites.

Though the obvious implication is that Trump doesn’t deserve any credit for a trend that started under Obama.

Which is certainly a legitimate argument, though honest journalists would have cited some people making the counter argument that his policies did make a difference (for what it’s worth, I think it’s a combination of both).

P.S. I’ll add another minor comment. The story quotes several people (all on the left side of the political spectrum) on how African Americans ostensibly will benefit if there is a bigger welfare state and more redistribution.

It’s certainly appropriate to write about that perspective, but why didn’t the three journalists bother to cite at least one person who could have pointed out the inverse relationship between social-welfare spending and the poverty rate?

Or cite at least one person who could have pointed out that low-income people in the United States enjoy higher living standards than middle class people in nations with bigger welfare states?

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Since both political parties have sent good and bad people to the White House, I don’t think it makes much sense to compare all Democratic presidents vs all Republican presidents.

But we can learn a lot by looking at the track record of specific presidents. I’ve done that with several past chief executives (Wilson, Hoover, FDR, Nixon, Reagan, Bush I, Clinton, Bush II, and Obama), and today we’re going to assess Trump’s performance.

The bottom line, as you can see from the chart, is that he did really well in some areas and really poorly in other areas, so his overall record was flat. Or perhaps slightly negative.

The bottom line is that Trump was good on taxes and bad on spending and trade.

And there were some very positive moves on regulation, but they were partly offset by areas where Trump increased intervention (coal subsidies, property rights, Fannie/Freddie, and international tax rules, for instance).

By the way, I’d like to give Trump a negative grade for his failure to address entitlements, but, in the interest of fairness, I only include actual policy changes.

Having given my big-picture assessment, here are some columns and articles that offer interesting insights.

We’ll start with some pro-Trump analysis. Professor Casey Mulligan opined in the Wall Street Journal that he restored growth (until the coronavirus, of course).

The Obama administration promulgated hundreds of new federal regulations that protected certain special interests from market competition. The beneficiaries included large banks, trial lawyers, big tech, major health-insurance companies, labor unions and foreign drug manufacturers. President Trump promised to undo all that, and in many cases succeeded, sometimes with the help of a Republican Congress. …Mr. Trump also helped remove government obstacles to innovation and competition in health care. Democrats will tell you that the first calendar-year drop in retail prescription drug prices in 46 years was mere coincidence, not the result of deregulation. …The Fed and the Obama economic team overpredicted growth almost every year from 2010-16. When growth failed to meet their rosy predictions, Mr. Obama’s advisers blamed the poor economic performance on America itself. …No one in Washington predicted that small business optimism would skyrocket to record levels when Mr. Trump was elected, that real wages would grow again (especially for blue-collar workers), that business formation would hit 20th-century highs, or that poverty and unemployment rates would quickly fall to record lows for Hispanics and African-Americans.  …Although Mr. Trump’s economic policy was imperfect, it was preferable by a long shot to Mr. Obama’s, which punished work, hiring and success rather than rewarding them. 

And here’s a chart that definitely makes Trump look good compared to Obama.

Those numbers will look much worse once 2020 numbers are included, but I won’t blame Trump for coronavirus-caused economic havoc (though I also don’t give him full credit for the good data in 2019).

Now let’s look at some less-than-flattering analysis.

Jeffrey Tucker of the American Institute for Economic Research lists some of Trump’s statist policies.

From 2015, even from his first public speeches following his presidential run, it was clear that Donald Trump was not a conservative in the Reagan tradition… This is not an American ideal. It’s not about freedom, rights, the rule of law, much less the limits on government. …Trump’s first year began with a more traditional Republican agenda of tax cuts, deregulation, and non-progressive court appointments. …That all changed on January 22, 2018. …This was the beginning of the trade war that would expand to Europe, Canada, Mexico, most of Asia, and ultimately the entire world. …What he ended up seeking was nothing short of trade autarky. …In addition to this calamity, US government spending soared 47% while the money supply registered record increases as measured by M1. The effects of this debt and money printing will be felt through next year.

Rick Newman wrote for Yahoo that Trump’s fiscal performance makes him an honorary Democrat.

Trump’s last-second objection to the $900 billion coronavirus relief bill Congress approved after eight months of negotiation is an unexpected Christmas gift for Democrats. Trump says the $600 direct payment to most Americans contained in the bill is too small. He wants $2,000. Trump could have insisted on this while Congress was drafting the bill… Democrats are gleeful. They’d happily accept a supersized stimulus payment, and even better, they now get to watch Republicans battle each other as they try to figure out what to do about Trump. Some Congressional Republicans think $2,000 is too generous, and there’s no chance of that getting into the bill unless other provisions come out. 

Newman was focusing on Trump’s spending proclivities during the pandemic, but the assertion that “maybe Trump’s a Democrat” applies to his fiscal record during his first three years as well.

P.S. I didn’t rank Trump on monetary policy for the same reason I didn’t rank Obama on that issue. Simply stated, I think both of them pursued a misguided Keynesian approach of easy money and artificially low interest rates, but we don’t have firm evidence (yet) of negative consequences.

P.P.S. I also didn’t give Trump a grade, positive or negative, regarding coronavirus. The federal government failed, but those failures largely were independent of the White House.

P.P.P.S. I generally approved of Trump’s judicial appointments, but don’t includes judges in my assessments of economic policy (though I may have to change my mind if they restore the Constitution’s protections of economic liberty and limits on the power of Washington).

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Since I’m a policy wonk, I rarely play the role of political pundit other than biennial election predictions.

But I’m getting a lot of requests to comment about Trump, especially in light of the recent protest/riot/insurrection and the ongoing political fallout (impeachment, etc).

So here are 10 observations (full disclosure: I didn’t vote for Trump in 2016 or 2020, but have never been part of the Never-Trump community).

Trump’s style is bluster and bullying – As I wrote way back before the 2016 election, Trump’s personal style is akin to a temperamental child. This can be entertaining (which is why CNN and other networks gave him so much attention during his initial campaign), but it also has limitations as an approach to governance (for instance, you don’t stop a virus by merely asserting it won’t come to the United States).

Trump is America’s “Crazy Uncle” – Early in his presidency, I happened to be in New Zealand and was asked about Trump in a TV interview. I basically said he’s like a grouchy and opinionated uncle who shows up on holidays and dominates the conversation with controversial statements. Given what’s happened over the past few years, that observation holds up well.

Republicans lawmakewrs in Washington never liked Trump – GOPers in the House and Senate like some of the things Trump has accomplished (tax reform and conservative judges), but they’ve never liked having him as president because he is too erratic and too self-centered. But most important, they’ve been afraid his simultaneous popularity (with core GOP primary voters) and unpopularity (with, say, suburbanites) is a threat to their ability to stay in power. In other words, it’s hard to win general elections in some places as a Trumpian populist but also hard to win GOP primaries in many places as a Never-Trumper.

Republican voters, by contrast, like Trump – One thing that surprised me over the past four yeas is that I found strong support for Trump from grassroots conservative Republicans. Yes, they didn’t like his fiscal profligacy and they mostly didn’t like his protectionism, but they did like the fact that he was a “fighter,” unlike so many (but not all) Republican politicians who get cozy with the DC establishment. They also figured he was worth supporting because he was so reviled by the establishment media (i.e., the enemy of my enemy is my friend).

Republican lawmakers generally have been in a no-win situation – Because of Trump’s popularity with GOP voters, Republican lawmakers have felt a lot of pressure to act as Trump loyalists even though many of them don’t like his behavior and disagree with some of his policies.

Be glad there were normal GOPers in the Trump Administration – Some people in the Never-Trump community want to create a blacklist of people who worked for Trump. This is misguided in the vast majority of cases. Most Trump appointees had nothing to do with Trump’s excesses and instead did good things (deregulation, for instance) in the various agencies and departments where they worked.

There are three GOP wings: Populist Trumpies, conservative Reaganites, and the establishment – Most pundits portray GOP infighting as a battles between Trumpist conservatives and the Republican establishment (symbolized, perhaps, by Sen. Romney). But that’s an insufficient description of what’s happening because it overlooks the fact that there are plenty of Reagan-style conservatives who definitely are not part of the establishment, yet don’t fit in with Trump’s big-government populism. It will be very interesting to see which anti-establishment strain wields more influence in the next few years.

Trump’s legacy to GOP: Total Democratic control of DC – On January 21, 2017, Republicans controlled the House, the Senate, and the White House. Four years later (a few days from now), Democrats will control the House, the Senate, and the White House. By way of background, one of the reasons I don’t like George W. Bush is that his failed polices paved the way for the left to have total control of Washington in 2009 and 2010. Shouldn’t Trump be judged similarly?

In spite of his many flaws, why did Trump win normally Democratic states? – While I just explained that Trump set the stage for the left to have total power in Washington, Republicans need to figure out how Trump managed to win some states in 2016 that historically have been unwinnable when contested by establishment Republicans (though he lost some traditionally GOP-leaning states in 2020).

In spite of his many flaws, why did Trump get more minority votes? – Similarly, Republicans need to figure out how a supposedly racist Trump managed to win a higher percentage of minority voters than recent GOP nominees such as John McCain and Mitt Romney. The bottom line is Republicans need to figure out if there are good parts of Trumpism once Trump is out of the picture.

I’ll close with a few statements:

  • It is perfectly okay to have voted for Trump because you liked some of his policies (whether they are ones I like, such as tax cuts, or ones I don’t like, such as protectionism).
  • It is perfectly okay to have voted against Trump for the same reason.
  • It is perfectly okay to have voted for Trump because you wanted to shake up the Washington establishment with unconventional behavior.
  • It is perfectly okay to have voted against Trump because his unconventional behavior was offensive.
  • It is perfectly okay to have been a Never-Trumper or a Trumpian populist.
  • What’s not okay, though, is to engage in political violence.
  • And what’s utterly awful is lying to supporters and creating the conditions for political violence.

P.S. While it’s worth spending some time to dissect and analyze the past four years, I hope that libertarians, Reagan conservatives, Trump populists, Never-Trumpers, establishment Republicans, etc, all join together to fight some of Biden’s awful ideas (the “public option” threat to private health insurance, class-warfare taxes, gun control, a blue-state bailout, etc).

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Even though my 2020 prediction for the presidential race was much more accurate than my 2016 prediction, I’m definitely a policy wonk rather than a political pundit.

That being said, I’m very interested in elections because voting patterns eventually can translate into policy changes.

And some of the voting patterns from Tuesday were rather surprising. For instance, I was shocked at the data that compared 2016 exit poll data with 2020 exit poll data and found that Trump got more votes in 2020 from every group other than white men.

And I was also shocked to learn that Trump did a much better job of attracting non-white votes than any other Republican candidate in recent history.

My pro-Trump friends tell me that this is evidence that a Trumpian approach is capable of attracting new voters, particularly minorities. Indeed, they tell me that Trumpism should be the model for all the politicians who may think about going for the Republican nomination in 2024.

So, as part of my post-election analysis (see here, here, here, and here), let’s explore whether the GOP will be (or should) a Trump party.

We’ll start with an article that Sean Trende authored for Real Clear Politics.

The Democratic playbook against Republicans had remained more or less the same since 1992. You could portray the GOP candidate as someone who wanted to gut Medicare and Social Security. Or, you could portray him as a closet theocrat. …Every major GOP candidate was vulnerable to at least one of these attacks, and usually both. As for Trump? Neither of those attacks landed. He famously opposed entitlement reform, and ran as a big-spending Republican. And the closet theocrat charge? Needless to say, that mantle is hard to hang on Trump. …there’s no going back for Republicans. …it is a “NeverTrump” delusion that the old GOP coalition is going to be resurrected. The political demand isn’t there, and whomever is nominated in 2024 will likely have an agenda that more closely resembles Trump’s than Mitt Romney’s. …The successful Republican candidates over the past 50 years have all had a cultural connection to what some jokingly call ’Murica.  …Reagan spoke the language of Middle America. To be sure, Donald Trump’s vulgarity contrasts sharply with Reagan’s class, and that has limited his opportunities for political success substantially, but he nevertheless connects with a group of voters.

Elaina Plott, in a piece for the New York Times, explains that the GOP is now a Trumpist party, even if that simply means being more willing to fight.

…for all the attention paid to what Trump represents in American politics, the most salient feature of his ascent within the Republican Party might be what he doesn’t represent. When Ronald Reagan overthrew the old order of the Republican Party in the 1980 election, he did so as the figurehead of a conservative movement… Trump’s takeover, by contrast, has been as one-dimensional as it has been total. In the space of one term, the president has co-opted virtually every power center in the Republican Party… But though he has disassembled much of the old order, he has built very little in its place. …That this is no longer Paul Ryan’s party is clear. What Trump has turned it into, though, is less so. …“The party right now is just Trump, right?” said one senior Senate G.O.P. aide. “So when you take him out of it, what do we have left?” …The difficulty with engineering a new paradigm that builds on Trump’s 2016 win is that the president himself is not especially committed to it. …the one thing that truly unified the Republican base in its support of Trump was a belief that he was a “fighter.” …the Republican base today is willing to bend more on policy in service of what it believes to be a more existential war.

Interestingly, even ardent anti-Trumpers seem to think Trump-style politics will outlast Trump.

In a column for the Chicago Tribune, Eric Zorn frets that post-Trump Trumpism will be very effective.

Trumpism — an unapologetically coarse, swaggering and nasty brand of politics — has been vindicated. Forget competence. Forget dignity. Forget class. Even forget policy (remember Trump’s health care plan that was always just two weeks away from unveiling?). Tribalism is king. Fear clobbers hope. Truth is optional. Character doesn’t count. The guardrails are down. …The GOP looks likely to hold the Senate, which means Republicans can put a brick on any legislation a President Joe Biden would want to pass. Trump has already given the GOP three U.S. Supreme Court justices and conservative control of the judicial branch of government for at least a generation… a Democratic President Biden, flailing impotently against a recalcitrant Republican Senate, would likely boost the GOP’s fortunes in the 2022 midterms and position the party well for the presidential race two years later. With Trump and his family safely on the sidelines, Republicans could nominate a candidate who inspires their base with shameless bluster and schoolyard insults, but who actually knows a thing or two about governing. Trumpism without Trump. An even more frightening thought in some ways than Trumpism with Trump.

Meanwhile, Jonathan Last of the never-Trumper Bulwark writes that there will be a battle for the GOP’s soul and that the Trumpists will prevail.

If Donald Trump loses, there is going to be a civil war inside the Republican party and the conservative movement. On one side will be the Trumpists, who believe all of white nationalism and authoritarian stuff. On the other side will be the Vichycons, who never liked Trump, but who went along with Trumpism because they were partisans… Here is how the civil war will play out. …After the inauguration, all three of these groups will join together to oppose anything and everything the Biden administration does and it will look like comity. …Once it becomes clear that Trump plans on being the one to choose the 2024 nominee, he’ll have a large base of support and the Republican party will be faced with the same decision matrix it had in mid-2016. …if Republican primary voters want more Trumpism, then the Republican party will continue down this path, no matter what the Vichycons say. The Vichycons will have the magazines and op-ed pages, and a handful of elected Republicans. The Trumpists will have an active former president of the United States, his family, Fox, …and a floor of probably 30 million voters. I know which side I would bet on.

Last but not least, in a must-read article for New Yorker, Nicholas Lemann writes about how Trump won in 2016, how he governed, and what will happen after he leaves.

…is there a future in Trumpism? …An ambitious Republican can’t ignore Trumpism. …But is it possible to address it without opening a Pandora’s box of virulent rage and racism? …The Republican Party has long had a significant nativist, isolationist element. In the Party’s collective memory, this faction was kept in check by “fusionism,” a grand entente between this element and the Party’s business establishment. …Trump…didn’t talk about the need for limited government or for balancing the federal budget. …He didn’t extoll free trade. He didn’t court the Koch brothers. He did not sign the no-new-tax pledge… Trump was opposed by more officials in his own Party (the Never Trumpers of their title) than any Presidential nominee in recent American history. …Trump’s key insight in 2016 was that the Republican establishment could be ignored, and his primary campaign pitched only to the Republican base, which no longer believed in the free-market gospel, if it ever had. …the difference between Trump as a candidate and Trump as the President goes back to fusionism. …appointees without previous connections to Trump but with deep connections to the Party’s libertarian wing have put in place an enhanced version of the standard Republican program. The result has been an odd mix of traditional Republican policies and Trumpian rhetorical flourishes. …As Trump has outsourced economic policy to the establishment, he has outsourced social policy to the evangelicals. …Steven Hayward, a well-connected conservative who has written the two-volume history “The Age of Reagan,” told me, “The biggest surprise about Trump is that he has turned out to govern as a conservative. …That raises the question of where the Republican Party will go after he leaves office. …there are three competing predictions about the future of the Party over the coming years. Let’s call them the Remnant, Restoration, and Reversal scenarios.

And here are those three camps, starting with the “Remnant” crowd, who are the heirs to Trumpism.

Could somebody else use the Trump playbook to win a Presidential election? Those who believe in the Remnant scenario think so. …The obvious candidate to carry out a high Trumpist strategy in 2024 would be Donald Trump, Jr… Several other potential Republican candidates, most notably Senators Tom Cotton, of Arkansas, and Josh Hawley, of Missouri, have demonstrated that they see Trump’s success as instructive.

Next we have the “Restoration” group, who want the GOP to be a Reagan-style party.

Under the Restoration scenario, …Republicans, as if waking from a bad dream, could recapture their essential identity for the past hundred years as the party of business. They could revive a Reagan-like optimistic rhetoric of freedom and enterprise… Many Never Trumpers would feel comfortable again in a Restorationist Republican Party. Restoration could entail a conventionally positioned Presidential candidate, such as Mike Pence… But the most discussed Restorationist candidate is Nikki Haley, the former governor of South Carolina and a former U.N. ambassador.

Then we have the “Reversal” folks, who want the GOP to be the anti-capitalism party.

The Reversal scenario, though perhaps the least plausible, is the most threatening to the Democratic Party. The parties would essentially switch the roles they have had for the past century: the Republicans would replace the Democrats as the party of the people, the one with a greater emphasis on progressive economic policies… today poorer districts are far more likely to vote Republican and richer districts are far more likely to vote Democratic. …People in this camp talk about the failures of “neoliberalism,” “financialization,” and “market fundamentalism,” and condemn “zombie Reaganism.” …The favored Presidential candidate for 2024 among the Reversalists is Senator Marco Rubio, of Florida.

Now for my two cents.

Since I prefer Reagan over Trump, that presumably puts me in the “Restoration” camp.

But I don’t think many people care what I prefer, so I’ll wrap up by giving my prediction of what will happen.

In the post-Trump environment, I think Republicans will revert to their normal behavior (i.e., the “Restoration” folks will prevail), but only if they absorb two Trump-style flourishes.

  • From a stylistic perspective, I think the desire for “a fighter” is what many voters found appealing about Trump (as was mentioned above in Elaina Plott’s article from the New York Times). My guess is that a lot of Republicans will copy that aspect of Trump’s behavior, but obviously without the silly tweets and insults. I hope that means no tax-hiking budget deals.
  • From a policy perspective, I think the biggest change will be less sympathy for trade and immigration. To the extent I have any influence with Republicans, I’ll try to convince them to at least protect and promote free trade with other democratic nations. And I’ll also remind them that high-skill immigration (such as the people we attract with the EB-5 program) is worth preserving.

So which Republican can best mix Reaganism with those two bits of Trumpism?

Beats me.

P.S. For what it’s worth (and I don’t think it’s worth much since it’s far too early), here’s some polling data on Republican preferences for the the 2024 nomination.

Keep in mind that this poll took place last year, when the economy was booming and voters presumably had a more positive view of President Trump. I suspect the Trump children would not do as well if the poll was repeated today.

P.P.S. My nightmare scenario is that GOP politicians decide the lesson of Trumpism is that they should copy his approach of being weak-kneed on the issue of genuine entitlement reform.

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For what it’s worth, my presidential prediction for 2020 will probably turn out to be more accurate than my presidential prediction for 2016.

But I doubt anyone cares about that. Let’s instead look at what happened last night (and, in some cases, what is still happening).

President

It appears that Biden will prevail in the battle for the White House when the dust settles, but you can see from this Washington Post map that the race was much closer than most people expected (Pennsylvania is expected to shift to Biden as mail-in votes are counted, and perhaps Georgia as well).

If that’s the final result, here are two obvious takeaways based on where a president has a lot of unilateral power.

Other policy areas generally require agreement between the executive branch and the legislative branch, so we can’t know the impact of a Biden presidency without perusing congressional results.

Senate

In my humble opinion, the big news of the night is that Republicans appear to have retained control of the Senate.

If true, that means some left-wing goals are now very unlikely.

There won’t be any court packing. There won’t be any serious effort to increase the number of Democratic senators by granting statehood to Washington, DC, and Puerto Rico.

But let’s focus on the economic issues. Here are some quick takeaways.

House of Representatives

It appears that Republicans will gain seats, which is contrary to all expectations.

That being said, there’s zero possibility of a GOP takeover, so Nancy Pelosi will remain in charge.

Ballot Initiatives

I wrote two weeks ago about this election’s six most important ballot initiatives.

The great news is that taxpayers scored a big victory by defeating the effort to get rid of the flat tax in Illinois an replace it with a so-called progressive tax. Winning that battle probably won’t rescue the Prairie State, but at least it will slow down its march to bankruptcy.

The other five battles mostly were decided correctly – at least based on the latest vote margins.

  • California voters rejected an initiative that would allow the state to engage in racial discrimination.
  • The California initiative to weaken limits on property taxes is trailing.
  • The Colorado initiative to lower the state’s flat tax appears prevailed.
  • The Colorado initiative to strengthen TABOR (the state’s spending cap) is leading.
  • The one clear piece of bad news is that an Arizona initiative to impose a big increase in the top income tax rate appears likely to prevail.

What’s the future for Trump and Trumpism?

Regular readers know I want the GOP to be the Party of Reagan rather than the Party of Trump.

So I will be very interested to see whether Trump’s apparent defeat means Republicans go back to (at least pretending to favor) conventional small-government conservatism.

That will have the be the topic of a future column.

A Silver Lining for Republicans

The party controlling the White House usually loses mid-term elections. For recent examples, Democrats won the House in 2018 and there were big victories for the GOP in 2010 and 2014 during the Obama years.

In all likelihood, Republicans will now do much better in the 2022 midterm election with Biden in the White House instead of Trump.

A Silver Lining for Taxpayers

It’s not something that can be quantified, but congressional Republicans will now become much better on spending issues. They’ll no longer face pressure to go along with Trump’s profligacy and they’ll have a partisan incentive to oppose Biden’s profligate agenda.

P.S. Whether you’re happy or sad about the election results, remember that it’s always appropriate to laugh at the clowns and crooks in Washington.

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Yesterday, I shared some jokes about Joe Biden (since updated with a very amusing addendum). Today, to keep everything fair, we’re going to make fun of Trump.

We’ll start with Trump playing the role of James Bond.

Next, let’s look at Trump’s view of the world with this map.

If you liked this map, check out this collection of Trump maps from 2018.

There is some good news for Trump, at least according to Babylon Bee, America’s best site of satire.

Trump is polling high among an unexpected group: libertarians, who were energized and drawn to Trump’s cause after the New York Times revealed that he paid as little as $750 in federal taxes some years. “Only paying a few hundred in federal theft? This guy is my hero!” said libertarian man Murray Mickelson of New Hampshire. “If only all of us could be that smart with our taxes.” …Libertarians across the country paid tribute to Trump’s accomplishment by firing their AR-15s into the air and doing hard drugs, though this is what they were already planning on doing anyway.

Though let’s not forget Biden also aggressively avoided taxes, so libertarians may be torn.

I’m not sure there’s much mileage left in the Trump-Russia issue, but this cartoon got a chuckle from me.

The Onion has faded as a satire site, but it still produces some amusing material, such as this story about the Trump version of poll watching.

Pushing back against what he viewed as an overly hysterical media narrative, Trump supporter Tom Nagle whispered his assertion Monday that poll watching is not intimidation into the ear of a man filling out a ballot. “Keeping an eye on what’s going on at the polls is simply a way to ensure that the election is conducted fairly,” said an armed Nagle, his hot breath reportedly palpable on the prospective voter’s neck as he continually issued assurances that he was merely there to safeguard democracy. …At press time, Nagle had beaten the man unconscious after he was unable to immediately produce a voter ID.

The Onion also produced an article detailing how Trump can win.

With the election around the corner, the Republican Party campaign of President Donald Trump is looking for ways to win reelection over his Democratic Party challenger, Joe Biden. The Onion looks at key factors that could help Trump defeat Biden and retain the presidency. …Disenfranchise millions of Biden supporters with scheme to use electoral college exactly as intended. Win over undecided voters by committing to spare their lives during second term. …Giving everyone another 12 hundo couldn’t hurt. Disarm one of Biden’s key electoral advantages by killing Eric so he has a deceased son too. …Pledge to uphold core Republican values like massive voter suppression. Highlight dozens of crimes Biden failed to prevent him from committing during his first term. Refuse to accept election results citing upcoming Supreme Court ruling.

I’ve already predicted Trump will lose tomorrow.

But he’s about to get even worse news.

As usual, I’ve saved the best for last. I laughed out loud when I saw this meme.

Ouch!

P.S. If yesterday’s jokes and today’s jokes are insufficient, I shared some mockery of both Joe Biden and Donald Trump back in August.

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Given my big miss in 2016, I’m not sure why anyone would be interested in my election predictions, but I’ve received several emails asking me to offer up my guesses for 2020 (perhaps some of them are long-time readers who remember 2010, when I actually did a good job?).

Before I offer up my prediction, I’ll first share some of the guesses from the experts.

Everyone is predicting Biden, though my Trump friends regularly remind me that the experts were wrong in 2016.

We’ll start with the outlook from Real Clear Politics.

Next, we have Nate Silver’s 538 numbers.

Here are the betting odds for the election, as compiled by John Stossel and Maxim Lott.

And here’s Larry Sabato’s Crystal Ball forecast.

I’ll add one caveat to the above estimates.

This tweet from Frank Luntz explains why my Democratic friends are still nervous.

Finally, for those of you who want my guess, here’s my prediction of a comfortable Biden victory.

It’s basically the same (wrong) prediction I made in 2016, except I’m now giving Arizona and Michigan to the Democrats and Pennsylvania to the Republicans.

For what it’s worth, I was very tempted to give Pennsylvania – and maybe a few other states – to Biden.

Why? Because I think late-deciding voters may decide that they’re tired of all the drama and fighting that we get with Trump in the White House.

But I ultimately decided on the above map because I also think some of those voters may worry about Biden’s age. And they may worry even more about the Democratic Party’s leftward drift.

I guess we’ll know in a week (or so!).

In any event, if you really want to have fun, you can take my predictions, give Arizona, Florida, and North Carolina to Trump, along with one of Maine’s congressional districts, at which point you’d have a 269-269 tie. That would be a perfect ending for 2020, huh?

I’ll close with a few words about policy.

Biden clearly would move the country to the left on certain issues, most notably taxes and regulation. The only silver lining to that dark forecast is that I suspect that his tax increase will be much smaller than what’s contained in his awful plan.

I’m also somewhat hopeful that he won’t push for the so-called Green New Deal and that we’ll instead get the more-modest kind of Solyndra-style cronyism that we got under Obama. That’s bad, but not the end of the world.

The good news is that trade policy will move in the right direction.

But the biggest silver lining to a Biden victory is that Republicans will revert to pretending to once again be opposed to big government.

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Last night’s train-wreck debate reinforced my disdain for politicians.

But let’s ignore the immature theatrics from Trump and Biden and focus on one of their policy disagreements.

The two candidates squabbled over whether creating a government-administered health plan (see page 31 for a description of Biden’s so-called  “public option“) would lead to the demise of the current system of employer-provided health insurance.

For what it’s worth, there are two big reasons why I’m not a fan of the current employer-based system.

That being said, I’m very aware of the fact that politicians are always capable of making things worse (the “lather-rinse-repeat cycle” of government failure).

So let’s consider this key question: Government intervention has made our health system expensive and inefficient, but would a “public option” make things better or worse?

About two months ago, I shared this video which explains why the so-called public option will wind up being an expensive boondoggle.

Given the track record of health entitlements, I think the video you just watched is correct. A public option would be a fiscal nightmare.

But does that mean it also would be a threat to the employer-based system of private health insurance?

I think the answer is yes, largely because the subsidies that will make the system more expensive are also the subsidies that will make the public option seem like a good deal.

Let’s use two analogies to get this point across.

  • Fannie Mae and Freddie Mac dominate housing finance, not because government-created entities are efficient, but because they use subsidies from the federal government to under-price private competitors.
  • Parents know private schools produce much better educational outcomes than government schools, but most families opt for the inferior option because it’s already being financed by their tax dollars.

I fear the same thing will happen with the so-called public option. Politicians (in their never-ending efforts to but votes) will keep increasing the subsidies. That will make employer-based health plans seem less attractive by comparison.

And there will also be political pressure to provide an ever-more-extensive set of benefits (as illustrated by the cartoon). That will also make employer-based health plans seem less attractive by comparison.

The net result of all this is that even though the vast majority of workers are happy with their current employer-provided health plans, Biden’s public option will slowly but surely squeeze them out of the market.

The bottom line is that we’ll wind up with single-payer, government-run healthcare, but politicians would be sneaking it in the back door.

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Washington is a cesspool of waste, fraud, and abuse.

All taxpayers, to avoid having their income squandered in D.C., should go above and beyond the call of duty to minimize the amount they send to the IRS.

Which is why today’s column is a bipartisan love fest for Donald Trump and Joe Biden – both of whom have been very aggressive in limiting their tax liabilities.

Here are some details from the report in the New York Times about Trump’s leaked tax returns.

Donald J. Trump paid $750 in federal income taxes the year he won the presidency. In his first year in the White House, he paid another $750. He had paid no income taxes at all in 10 of the previous 15 years — largely because he reported losing much more money than he made. …His reports to the I.R.S. portray a businessman who takes in hundreds of millions of dollars a year yet racks up chronic losses that he aggressively employs to avoid paying taxes. …They report that Mr. Trump owns hundreds of millions of dollars in valuable assets, but they do not reveal his true wealth. …Most of Mr. Trump’s core enterprises — from his constellation of golf courses to his conservative-magnet hotel in Washington — report losing millions, if not tens of millions, of dollars year after year. …Business losses can work like a tax-avoidance coupon: A dollar lost on one business reduces a dollar of taxable income from elsewhere. The types and amounts of income that can be used in a given year vary, depending on an owner’s tax status. But some losses can be saved for later use, or even used to request a refund on taxes paid in a prior year.

It’s worth noting that the leaked returns didn’t show any unknown business ties to Russia. Nor do they suggest any criminality.

Instead, Trump appears to have relied on using losses in some years to offset income in other years – a perfectly legitimate practice.

Now let’s look at some of what CNBC reported about Joe Biden’s clever tactic to save lots of money.

…consider borrowing a tax-planning tip from Joe Biden. The former vice president…reported about $10 million in income in 2017 from a pair of S-corporations… The two entities were paid for the couple’s book deals and speaking gigs. …both S-corps generated a lot of income, they paid out modest salaries in comparison. …In 2017, the two companies paid the couple a combined $245,833 in wages. …any amounts the Bidens received as a distribution wasn’t subject to the 15.3% combined Social Security and Medicare tax. …Tim Steffen, CPA and director of advanced planning at Robert W. Baird & Co. in Milwaukee. “…if you don’t report that income to the business as wages, then that portion of the income avoids Social Security and Medicare taxes,” he said.

So how much did this aggressive strategy save  the family?

The article doesn’t do all the math, but it certainly seems like the Biden household avoided having to cough up any payroll taxes on more than $9.75 million.

There’s a “wage base cap” on Social Security taxes (thankfully), so it’s possible that their tax avoidance only saved them about $283,000 (what they would have paid in Medicare taxes – 2.9 percent rather than 15.3 percent).

But that’s still a nice chunk of change – about four times as much as the average household earned that year.

As far as I’m concerned, we should applaud both Trump and Biden. Tax avoidance is legal. Even more important, it’s the right thing to do.

Though my applause for Biden is somewhat muted because he said in 2008 that paying more tax is patriotic. So he’s guilty of tax hypocrisy, which seems to be a common vice for folks on the left (the Clintons, John Kerry, Obama’s first Treasury Secretary, Obama’s second Treasury Secretary, Governor Pritzker of Illinois, etc).

For all his flaws, at least Trump isn’t a hypocrite on this issue (though all his spending may pave the way for future tax increases).

P.S. Here’s a story about the greatest-ever tactic for escaping taxes.

P.P.S. And here’s my favorite adults-only story about tax avoidance.

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Last November, I criticized Nancy Pelosi’s scheme to impose European-style price controls on pharmaceutical drugs in the United States.

I wasn’t the only one who objected to Pelosi’s reckless idea.

We have forty centuries of experience demonstrating that price controls don’t work. The inevitable result is shortages and diminished production (sellers won’t produce sufficient quantities of a product if they are forced to lose money on additional sales).

Which helps to explain why the Wall Street Journal also was not a fan of Pelosi’s proposal

Here’s some of the paper’s editorial on the adverse impact of her proposed intervention.

Mrs. Pelosi’s legislation would direct the secretary of Health and Human Services to “negotiate” a “fair price” with drug manufacturers… Any company that refuses to negotiate would get slapped with a 65% excise tax on its annual gross sales that would escalate by 10% each quarter. Yes, 65% on sales. …The bill also sets a starting point for Medicare negotiations at 1.2 times the average price of drugs in Australia, Canada, France, Germany, Japan and the U.K.—all of which have some form of socialized health system. …foreign price controls have reduced access to breakthrough treatments. …Price controls are also a prescription for less innovation since they reduce the payoff on risky research and development. …Only about 12% of molecules that enter clinical testing ultimately obtain FDA approval, and those successes have to pay for the 88% that fail. …Price controls would hamper competition by slowing new drug development. The U.S. accounts for most of the world’s pharmaceutical research and development, so there would be fewer breakthrough therapies for rare pediatric genetic disorders, cancers or hearing loss.

A damning indictment of knee-jerk interventionism, to put it mildly.

Well, a bad idea from Democrats such as price controls doesn’t magically become a good idea simply because it subsequently gets pushed by a Republican (unless, of course, you qualify as a partisan as defined by my Ninth Theorem of Government).

Unfortunately, we now have a new example of bipartisan foolishness.

Andy Quinlan of the Center for Freedom and Prosperity opined on President Trump’s misguided plan to adopt European-style price controls.

…other nations have been free riders on America’s innovative pharmaceutical industry. …they have enacted socialist price controls to limit what they pay knowing that the largest market would pick up the slack to ensure a steady supply of new lifesaving drugs. It needs to stop, but President Trump’s recent executive order is not the right way to do it. …his “Most Favored Nations” Executive Order to…limit…prescription medication payments made through Medicare… But this is a flawed way of thinking about the problem. Other nations are…engaging in theft via price controls. …drugs can take months or even a year longer to arrive in countries with socialist healthcare systems. Patients suffer as a result… Another likely consequence is less innovation. Some drugs in this new price environment will no longer be cost effective to be developed. Patients again will suffer. …Getting foreign jurisdictions to pay for their share of pharmaceutical innovation by putting a stop to price manipulation is a noble goal. But it should not come at the expense U.S. industry and patients.

A study by Doug Badger for the Galen Institute points out that the Trump Administration’s approach – for all intents and purposes – would use Obamacare’s so-called Center for Medicare and Medicaid Innovation to impose foreign price controls on prescription drugs in the United States.

The Affordable Care Act created CMMI and vested it with extraordinary powers. …The statute also shields CMMI projects against administrative and judicial review. …two HHS secretaries have claimed authority under CMMI to mandate a Medicare Part B payment mechanism without having to seek new legislation. …the Trump administration issued an advance notice of proposed rulemaking (ANPRM) announcing its intention to propose a far more sweeping Medicare Part B drug demonstration project….to…scrap the ASP Medicare reimbursement methodology in favor of one based on drug prices paid in other countries. …CMS is considering the establishment of an “international price index” (IPI). It would calculate the IPI based on the average price per standard unit of a drug in select foreign countries.

This is troubling for several reasons.

…the other countries on the proposed list have lower living standards than do Americans, as measured by per capita household disposable income… The median disposable per-capita income in the IPI countries is thus about one-third less than in the U.S. …Medicare reimbursement for physician-administered drugs would largely be based on international reference prices in which the regulatory agency of one government sets drug prices based at least in part on those set by regulatory agencies in other countries. …for all the different payment methodologies Congress has devised for medical goods and services, it has never based reimbursement on prices that prevail in foreign countries. The agency’s role is to implement congressionally-established reimbursement systems, not to create them out of whole cloth.

As you might expect, the Wall Street Journal has also weighed in on Trump’s plan.

The editorial points out there will be very adverse consequences if the President imposes European-style price controls.

Mr. Trump signed an executive order that could make…life-saving therapies less likely. Mr. Trump has been threatening drug makers for months with government price controls. …The President’s order directs the Department of Health and Human Services to require drug makers to give Medicare the “most favored nation” (i.e., lowest) price that other economically developed countries pay. …This ignores some crucial details. …Other countries also have to wait longer for breakthrough therapies, which is one reason the U.S. has much higher cancer survival rates. …The larger reality is that developing novel therapies isn’t cheap and can take years—sometimes decades—of research. Most products in clinical pipelines fail, and even those that succeed aren’t guaranteed to produce a profit. …The risk for all Americans is that drug makers will shelve therapies for hard-to-treat diseases that are in the early stages of development because of the high failure rate and low expected profit. This risk is most acute for therapies that treat rarer forms of diseases… The victims will be the cancer patients of the future, including perhaps some reading this editorial.

The bottom line, as I noted in the above interview and as many others have observed, is that other nations are free-riding on American consumers.

They get access to most of the drugs at low prices (since pharmaceuticals are cheap to produce once they are finally approved).

But the net result, as I tried to illustrate in this modified image, is that American consumers finance the lion’s share of new research and development.

This isn’t fair.

But we’d be jumping from the frying pan into the fire if we had European-type price controls that stifled innovation by pharmaceutical companies.

Sure, we’d enjoy lower prices in the short run, but we would have fewer life-saving drugs in the future.

P.S. There’s an analogy between prescription drugs and NATO since Americans bear a disproportionate share of costs for both. However, there’s a strong argument that there’s no longer a need for NATO. By contrast, I don’t think anyone thinks it would be a good idea to stifle the development of new drugs.

P.P.S. As an alternative, a friend has been urging me to support the idea of using the coercive power of government to mandate that American-based pharmaceutical companies charge market prices when selling overseas – an approach that would give foreign governments a choice of paying more or not getting the drugs. That seems like a better approach, at least in theory, but my friend has no answer when I point out that those companies would then have an incentive to leave the United States (as many firms did before Trump lowered the corporate tax rate to improve U.S. competitiveness).

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Regular readers know that I give Trump mixed grades on economic policy.

He gets good marks on issues such as taxes and regulation, but bad marks in other areas, most notably spending and trade.

Which is why I’ve sometimes asserted that there has been only a small improvement in the economy’s performance under Trump compared to Obama.

But I may have to revisit that viewpoint. The Census Bureau released its annual report yesterday on Income and Poverty in the United States. The numbers for 2019 were spectacularly good, with the White House taking a big victory lap.

Here are the three charts that merit special attention.

First, we have the numbers on inflation-adjusted median household income. You can see big jumps for all demographic groups.

Next, here’s a look at whether Americans are getting richer or poorer over time.

As you can from this chart, an ever-larger share are earning high incomes (a point I made last month, but this new data is even better).

Last but not least, here’s the data on the poverty rate.

Once again, remarkably good numbers, with all demographic groups enjoying big improvements.

We’ll see some bad news, of course, when the 2020 data is released at this point next year. But that’s the result of coronavirus.

So let’s focus on whether Trump deserves credit for 2019, especially since I got several emails yesterday from Trump supporters asking whether I’m willing to reassess my views on his policies.

At the risk of sounding petulant, my answer is no. I don’t care how good the data looks in any particular year. Excessive government spending is never a good idea, and it’s also never a good idea to throw sand in the gears of global trade.

But perhaps we should rethink whether the positive effects of some policies are stronger and more immediate while the negative effects of other policies are weaker and more gradual.

I’ll close with two cautionary notes about “sugar high” economics.

For what it’s worth, we’re not going to resolve this debate because coronavirus has been a huge, exogenous economic shock.

Though if (or when) the United States ever gets to a tipping point of too much debt, there may be some retroactive regret that Trump (along with Obama and Bush) viewed the federal budget as a party fund.

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During the Obama years, I frequently criticized the Administration’s bad policy choices. On a wide range of issues.

But I also expressed disappointment when President Obama arbitrarily and unilaterally decided to override or overlook laws that were inconvenient to his agenda.

Or when he asserted powers that didn’t exist.

Simply stated, I care about the rule of law.

And I care about the rule of law regardless of which political party holds power.

Which is why I’m disgusted that the Trump Administration has stretched the law beyond the breaking point so that the Centers for Disease Control can run roughshod over private rental contracts.

In his column for the Washington Post, George Will observes the CDC is engaged in an unprecedented power grab.

…the Centers for Disease Control and Prevention…this month asserted a power to prohibit — through the end of 2020, but actually for as long as the CDC deems “necessary” — the eviction of private tenants from privately owned residences because of unpaid rent. This, even though eviction levels have been below normal during the lockdown. The CDC’s order protects tenants earning up to $99,000 — almost quadruple the official poverty line of $26,200 for a family of four. Or, for those filing joint tax returns, tenants earning up to $198,000, who are in the top quintile of U.S. households. …Noncompliant landlords can be fined up to $100,000 and incarcerated for up to a year. …A regulation promulgated by the executive branch grants vast — almost limitless, the CDC clearly thinks — discretion to an executive branch bureaucrat, the CDC director… And, if today’s director is correct, the director is authorized to curtail some property rights and abrogate some contracts nationwide, to suspend some state laws and strip state courts of jurisdiction in eviction cases. …The CDC presents all this as just another anti-infection protocol. Try, however, to imagine an activity or legal arrangement that the CDC, citing the regulation, could not overturn by fiat in the context of even a seasonal infectious disease such as the flu. Ilya Somin, law professor at George Mason University and another Cato adjunct scholar, notes: “Pretty much any economic transaction or movement of people and goods could potentially spread disease in some way.”

Christian Britschgi opines for Reason about the Trump Administration’s assault on property rights.

…the CDC’s eviction moratorium is an excellent example of how a patchwork of extreme, temporary policy interventions intended to stem the coronavirus pandemic has created a self-perpetuating justification for expanding government power across the board. …Over time, the economic damage and mass unemployed caused by a prolonged pandemic and continually extended shelter-in-place orders have fueled justifications for extending and expanding eviction moratoriums. After all, how can someone be expected to pay the rent if they aren’t legally allowed to work? Now a federal eviction moratorium covering all rental properties is being justified as necessary to ensure compliance with shelter-in-place orders. …the CDC’s order..ratchets up the government’s power in a way that won’t be easily undone.

Writing for the Foundation for Economic Education, Brad Polumbo explains why the CDC’s actions are so worrisome.

Under the direction of the Trump administration, the CDC instituted a unilateral order halting many evictions. It essentially nationalizes millions of private rental properties and strips landowners of their basic rights. …For legal justification, the Trump administration cites one vague law that says during a pandemic the CDC director “may take such measures to prevent such spread of the diseases as he/she deems reasonably necessary, including inspection, fumigation, disinfection, sanitation, pest extermination, and destruction of animals or articles believed to be sources of infection.” ….Across the country, millions of landlords will have tenants occupying their property and have no way to force them to pay rent or remove them if they won’t. …the federal government is trampling over private contracts and essentially seizing all affected rental properties as the domain of the state. …

Brad also makes the all-important point that the CDC’s regulation will actually make rental housing more expensive in the long run (sort of like the way rent control backfires).

…the CDC’s overreach will undoubtedly have severe economic consequences. This move will worsen the housing crisis in the long-run and make housing more expensive for everyone by decreasing supply. Many landlords will be unable to make their mortgage and property tax payments without rental income or any remedy for nonpayment. This will result in them losing their property and its eventual removal from the market. …this unprecedented invasion of contract rights and private property is sure to discourage future would-be landlords from renting out their property or entering the market. The long-term impact will be less housing overall, which means higher prices.

Congressman Thomas Massie of Kentucky is one of the nation’s most principled lawmakers.

Here’s his succinct analysis of what just happened.

Though I have a slight disagreement with Massie’s tweet.

This latest power grab by the federal government isn’t socialism. That would involve the government owning and operating rental properties.

Under the CDC edict, rental properties are still privately owned. It’s just that government controls how the property is used.

That’s a different economic system, as Thomas Sowell has explained.

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With the election less than two months away, there’s a lot of discussion and debate about Trump’s performance.

I put together a report card last year showing that his economic policies have been a mixed bag, with good grades on tax and regulation, but bad grades on trade and spending.

Today, let’s focus specifically on fiscal issues and try to identify the best and worst changes that have occurred during his presidency.

Let’s start with the good news.

For what it’s worth, I’m somewhat conflicted between two different provisions of the 2017 tax reform.

I’m a huge fan of the cap on the state and local tax deduction. For years, I had been arguing that it was very foolish for the federal tax system to subsidize high-tax states.

So I was delighted that the 2017 law restricted this subsidy (and I’m further delighted that we’re already seeing a positive impact with people “voting with their feet” against states such as New York, Illinois, and California).

However, that reform is not permanent. Like many other provisions of that law, it automatically expires at the end of 2025.

Which is why I’m going to choose the lower corporate tax rate as Trump’s best policy. Not only is that reform permanent (at least until/unless Joe Biden takes office), but it was enormously important for American competitiveness since the United States used to have the highest corporate tax rate in the developed world.

And the rate is still too high today, especially if you include the impact of state corporate tax rates, but at least the 2017 reform took a big step in the right direction.

And that big step is good news for jobs, wages, investment, and competitiveness.

Now for the bad news.

I could make the case that Trump’s overall spending increase is the problem.

Indeed, in a column for Reason, Matt Welch points out that Trump has not been a fiscal conservative.

The most traditional way to measure the size of government is to count how much money it spends. In Barack Obama’s last full fiscal year of 2016…, the federal government spent $3.85 trillion… In fiscal year 2020, before the coronavirus pandemic triggered a record amount of spending, the federal government was on course to cough up $4.79 trillion… So under Trump’s signature, before any true crisis hit, the annual price tag of government went up by $937 billion in less than four years—more than the $870 billion price hike Obama produced in an eight-year span… You can argue plausibly that Joe Biden and the Democratic Party will grow the government more. But the fact is, the guy railing against socialism…has grown spending faster than his predecessor and shown considerably less interest in confronting the entitlement bomb.

All of this is true, but I want to focus on specific policies, not just the overall spending performance.

Which is why I would argue that Trump’s worst fiscal policy is captured by this table from the Committee for a Responsible Federal Budget.

It shows what Trump promised compared to what he delivered and I’ve highlighted his awful record on non-defense discretionary spending (which is basically domestic spending other than entitlements). He promised $750 billion of reductions over 10 years and instead he saddled the American economy with $700 billion of additional increases.

P.S. Click here if you want background info on the different types of federal spending. But all you probably need to know is that many parts of the federal government that shouldn’t exist (Department of Education, Department of Agriculture, Department of Housing and Urban Development, Department of Transportation, etc) get much of their funding from the non-defense discretionary budget.

P.P.S. Trump has failed to address entitlements, which is reckless, but that’s a sin of omission. The increase in non-defense discretionary is a sin of commission.

P.P.P.S. I also thought about listing Trump’s failure to follow through on his proposal to get rid of taxpayer subsidies for the Paris-based Organization for Economic Cooperation and Development.

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Way back in early 2017, I warned in an interview that Trump would be a big spender (sadly, I was right). But I wasn’t being reflexively anti-Trump.

Here’s a clip from that same program where I speculated that Trump might have the political skill to win support from private-sector union workers.

In honor of Labor Day, let’s elaborate on this topic.

I’ll start with the political observation that Trump seems to do much better than other Republicans at getting support from working-class voters. Even workers who belong to unions (much to the dismay of their left-leaning leadership) appear to be disproportionately sympathetic.

Though it’s important to emphasize, as I said in the interview, the distinction between government bureaucrat unions and private-sector unions.

The unions that represent government employees have an incentive to lobby for bigger government since that means more lavishly paid members paying more dues. So those unions reflexively support higher taxes, more spending, and additional red tape.

Yet those are the policies that undermine private-sector job creation and reduce the competitiveness of companies operating in America. And that’s bad for all private workers – including those that belong to unions.

Which is why I speculated in the interview whether Trump would have the “political cunning” to convince those private-sector union members that their interests are not the same as those of bureaucrats.

I guess we’ll see on election day.

By the way, I have very mixed feelings on Trump’s strategy. Some of his policies are good (lower taxes and less red tap), but he also tries to appeal to union workers with policies that are bad (most notably, protectionism).

P.S. Feel free to enjoy some good cartoons mocking unionized bureaucrats by clicking hereherehere, and here.

P.P.S. I often tell my Republican friends that they’ll have more success appealing to private-sector union members if they come across as pro-market (which implies neutrality between employers and employees) rather than pro-business (which implies siding with employers).

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Yesterday’s column featured some anti-Trump humor.

Today, in the interest of providing equal time, here’s some pro-Trump satire.

We’ll start with this nightmare for left-wing parents.

By the way, I raised my daughter correctly, though I now worry she’s drifting in the wrong direction.

The satirists at the Babylon Bee report on anti-Trumpism in the media.

At his press conference last night, President Trump told everyone to stay hydrated and drink lots of water. “Water’s tremendous, very powerful stuff,” he said. “You won’t believe the things they can do with water. …It’s amazing. You can freeze it and make ice, I’m told. Ice is great for lots of things. Ice cream. Ice cubes. Igloos.” …Horrified journalists scrambled to warn Americans not to drown themselves in their pools and bathtubs. “Trump says water is good — but this is very misleading,” said Rachel Maddow. “Did you know that water kills many people every year? …Plus, do you know what’s hidden in water? Sharks. This president wants you to die from a shark attack!” Representatives for various bottled water companies quickly released a statement distancing themselves from the president’s remarks and warning everyone not to submerge themselves in the ocean for minutes at a time.

If I was still doing my weekly updates of coronavirus-themed humor, this next image would be perfect.

It’s a satirical look at casualty predictions for various events compared to the death toll from the virus.

I’m especially amused by the inclusion of “net neutrality” since folks on the left hysterically claimed the Internet would grind to a halt if that Obama-era policy was repealed.

Next, we have a old joke that has been reconfigured for the Trump era.

A CNN reporter walks into a neighborhood tavern and is about to order a drink when he sees a guy at the end of the bar wearing a “Make America Great Again” hat. It didn’t take an Einstein to know the guy was a Donald Trump supporter.

The CNN guy shouts over the bartender, loudly enough that everyone in the bar could hear, “Drinks for everyone in here, bartender, except for that Trump supporter.”

After the drinks were handed out, the Trump guy gives the CNN guy a big smile, waves at him and say, in an equally loud voice, “Thank you!”

This infuriates the CNN reporter, so he once again loudly orders drinks for everyone except the guy wearing the Trump hat. As before, this doesn’t seem to bother the Trump guy. He just continues to smile and again yells, “Thank you!”

So the CNN guy again loudly order drinks for everyone except the Trump guy. And again the Trump guy just smiles and yells back, “Thank you!”

At that point, the aggravated CNN reporter asks the bartender, “What the hell is the matter with that Trump supporter? I’ve ordered three rounds of drinks for everyone in the bar but him and all the silly ass does is smile and thank me. Is he nuts?”

“Nope,” replies the bartender. “He owns the place.”

As usual, I’ve saved the best for last.

I’ll close with the observation that it’s always the right time to make fun of politicians. We should mock Republicans. We should mock Democrats.

And we should mock individual politicians – not only Biden and Trump, but also Barack Obama, Hillary Clinton, Mitt Romney, Bernie Sanders, and Elizabeth Warren.

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I recently shared some Joe Biden humor, so now it’s time to target Trump.

But there’s so much of it that today’s column will feature anti-Trump humor today, and we’ll look at pro-Trump humor tomorrow.

We’ll start with this video mocking the Trump campaign’s interactions with Russia.

Not quite as good as Iowahawk’s video about the Pelosi GTxi, but very well done.

Next we have a helpful suggestion from Microsoft.

The following cartoon strip is especially painful to me since so few Republicans are publicly opposing Trump’s wasteful spending.

Here’s a cartoon that made me laugh.

The artist, Mike Lukovich, is very clever for a leftist.

Here’s the Trump version of a joke that seems to circulate every four years.

Donald Trump met with the Queen of England, and he asked her, “Your Majesty, how do you run such an efficient government? Are there any tips you can give me?”

“Well,” replied the Queen, “the most important thing is to surround yourself with intelligent people.”

Trump frowned, and then asked, “But how do I know the people around you are really intelligent?”

The Queen took a sip of tea. “Oh, that’s easy; you just ask them to answer an intelligent riddle.”

The Queen pushed a button on her intercom. “Please send Theresa May in here, would you?”

Theresa May walked into the room and said, “Yes, Your Majesty?”

The Queen smiled and said, “Answer me this, if you would, Theresa. Your mother and father have a child. It is not your brother and it is not your sister. Who is it?”

Without pausing for a moment, Theresa May answered, “That would be me.”

“Yes! Very good,” said the Queen.

Trump went back home to ask Mike Pence the same question. “ Mike, answer this for me. Your mother and your father have a child. It’s not your brother and it’s not your sister. Who is it?”

“I’m not sure,” said Pence. “Let me get back to you on that one.” He went to his advisers and asked everyone, but none could give him an answer.

Finally, Pence ran in to Sarah Palin in a restaurant the next night. Pence asked, “Sarah, can you answer this for me? Your mother and father have a child and it’s not your brother or your sister. Who is it?”

Sarah Palin answered right back, “That’s easy, it’s me!”

Pence smiled, and said, “Thanks!”

Pence then, went back to speak with Trump. “Say, I did some research and I have the answer to that riddle.

It’s Sarah Palin!”

Trump got up, stomped over to Pence, and angrily yelled, “No, you idiot! It’s Theresa May!”

Ouch. Reminds me of this Obama joke.

Next we have a cartoon that puts the GOP in the role of being Jerry Falwell, Jr. (if you don’t get the reference, I reluctantly invite you to click here).

As usual, I save the best for last.

Here’s a message from Stormy Daniels.

P.S. Other examples of Trump-themed humor can be found here, here, herehereherehere, and here.

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The best feature of libertarians is that we are very principled and look at everything through the lens of the non-aggression principle.

By contrast, the worst feature of politics, as explained by the Ninth Theorem of Government, is that it encourages people look at everything through the lens of partisanship.

In other words, there’s a desire to always make your team look good and the other team look bad, even if you have to torture data.

Here’s an example.

In a column for the New York Times, Michael Tomasky asserts that Democratic presidents have a much better track record on the economy than their Republican counterparts.

Mr. Biden and his party’s No. 1 job between now and Election Day: Make it clear that Democrats have been better stewards of the economy — for decades, and by far. Many people don’t believe this. …But it’s true. …the country has done better for decades under Democrats, by nearly every major economic measure. From John Kennedy through Barack Obama — 56 years during which, as it happens, we had a Democratic president for 28 years and a Republican president for 28 — we saw more than 50 million jobs created under Democrats and just 24 million jobs created under Republicans. Even the stock market has performed better under Democratic presidents. …just toting up numbers by the months each party had in power is imprecise. But there’s no better way to do it.

Any decent social scientist will quickly identify are all sorts of problems with Tomasky’s methodology.

  • What about the impact of which party has full or partial control of Congress?
  • Is it right to blame (or credit) presidents for what happens in their first year or two, before they’ve had a chance to enact and implement new policies?
  • Should other variables be measured, such as median household income or labor force participation?

But let’s set aside these concerns, as well as others that can be listed, and accept Tomasky’s numbers. Does this mean that the economy does better when Democrats are in the White House?

That’s certainly a possible interpretation, but it’s far more accurate to say that the economy does better when a president – regardless of party – adopts good policy (or, to be more accurate, if good policy is implemented during their presidency).

I’ve previously ranked presidents based on what happened to the burden of government spending during their tenures. And one thing that stands out is that Republicans seem to be even worse than Democrats – even when looking at what happened to domestic spending (with Reagan and Johnson being the only two exceptions).

And I’ve also graded many of the modern presidents (Richard Nixon, Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush, Barack Obama) based on their overall record on economics. If you peruse their performances, you’ll see there’s no obvious connection between good policy and partisan affiliation.

But I’ve never put together a best-to-worst list, so here’s my ranking of every president since Kennedy.

Let me elaborate – and also add some caveats.

For what it’s worth, I don’t think there’s good modern-quality data on JFK (or, to be more accurate, I’ve never searched for it), but I included him since he’s part of Tomasky’s analysis. That being said, he may be ranked too low. Yes, he spent too much money and implemented some bad policies, but he also lowered tax rates and pushed for free trade.

I also think it’s too early to grade Trump, but I included him since I know that will be of interest to readers. As you might imagine, I like what he’s done on taxes and red tape, but his record on other issues is bad – and getting worse. I’m especially concerned about the consequences and impact of the Fed’s easy-money policy, an approach Trump certainly supports.

Johnson and Nixon are unambiguously terrible, while Reagan is the star performer.

Clinton was surprisingly good (feel free to give the credit to Newt Gingrich if you want, but we didn’t need veto overrides to get the good policies of the 1990s).

The rest of the presidents were generally bad. I put them in reverse chronological order since I didn’t see any logical way of differentiating between them.

I can’t resist citing one more segment from Tomasky’s column.

Republican failures are not an unhappy coincidence. They’re a result of conservative governing practice. Republicans no longer fundamentally believe in the workings of government, so they don’t govern well. Their contempt for government is a result of conservative economic theory.

This is nonsense, as should be obvious from what I’ve already written. Republicans do not have a track record of “conservative governing.”

With one exception. We had relatively competent governance from the one GOP president who did have a “contempt for government” (actually, just contempt for big government).

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Politicians and interest groups periodically fan the flames of temporary panic to push for misguided policy. We’ve already seen three big examples this century.

  • The so-called PATRIOT Act was enacted in the feverish aftermath of 9-11, but many of its provisions simply added bureaucracy and gave government new/expanded powers unrelated to fighting terrorism.
  • The TARP bailout allegedly was needed to save us for financial collapse, but in reality was a substitute for a policy (FDIC resolution) that would have recapitalized the banking system without bailing out Wall Street.
  • Obama’s stimulus scheme had to be enacted to supposedly save the nation from another depression, but unemployment soared beyond administration projections and cronies got rich from boondoggles.

The same thing is now happening with the Postal Service, which ostensibly is on the verge of catastrophic collapse because of an expected increase in mail-in voting and sabotage by the Trump Administration.

The real story, though, is that bureaucracy has been losing money at a rapid pace for years and the only sensible solution is privatization. But that would upset the various postal unions and related interest groups, so they’ve created a make-believe crisis in hopes of getting more cash from taxpayers.

And this has nothing to do with Trump vs. Biden.

Let’s look at some rational voices on this topic, starting with this column by Charles Lane of the anti-Trump Washington Post.

Harder to account for is the progressive left’s idealization of the USPS, which began well before the uproar over new Postmaster General Louis DeJoy’s cost-cutting and its alleged impact on election mail. …when you look at what the agency actually does, a lot of it turns out to be a federally underwritten service for — profit-seeking businesses.Of the 142.6 billion pieces of mail of all kinds that the USPS handled in 2019, 53 percent was advertising material, a.k.a. junk mail, up from 48 percent in 2010. Junk mail makes up an even bigger share — 58 percent — of what individual households receive. …Companies pay a special rate, 19 cents apiece, to send these items (in bulk), as opposed to the 55 cents for a first-class stamp. …Some progressives are stuck in the pre-Internet age. Last week, Sen. Bernie Sanders (I-Vt.) said, apropos alleged mail delays: “I am not exaggerating when I say this is a life-and-death situation. The Post Office…delivers Social Security checks to seniors who rely on those benefits to survive.” He is exaggerating — a lot. Over 99 percent of all Social Security payments are sent by the more secure route of direct deposit; a 2013 law mandates it. …Crying “privatization” is the perennial scare tactic of progressives who oppose postal reform. That’s an odd one, too: Several European countries and Japan…have either fully or partially privatized their postal services. Actually, privatization is highly unlikely in the United States, given resistance from the two key lobbies — junk mailers and postal unions — that most influence Congress on this issue. …Something must be done to stem the Postal Service’s losses, which have totaled $83.1 billion since 2006, and to reduce its unfunded pension and health-care liabilities, which exceed $120 billion.

Here’s a twitter thread debunking some of the political hysteria about missing mailboxes.

And how about this column by Nick Gillespie of the anti-Trump Reason magazine.

By now you’ve probably heard that President Donald Trump and Postmaster General Louis DeJoy “are sabotaging democracy in plain sight” through a mix of nefarious ploys, ranging from removing “blue Post Office drop boxes” to scrapping mail-sorting machines to allegedly mandating a slowdown in delivering the mail. …The truth is far less incendiary… Here’s a little bit of math that should give voters succor. In 2016, about 140 million total votes were cast in the presidential election…with “nearly 24 percent…cast using by-mail absentee voting.” …Assume, for the sake of argument, that the same number of votes will be cast this year as in 2016. Even if all voters used the mail and posted their ballots on exactly the same day, that would comprise only 30 percent of the amount of mail the USPS says it processes every single day. So if the USPS screws up delivering votes in a timely and efficient manner this fall, it won’t be because of any sinister actions by the White House. It will be because of longstanding, well-documented managerial and cultural problems… For those who are interested in the post office’s chronically bad performance and “unsustainable” situation, the Government Accountability Office (GAO) has produced a long list of studies on where the problems come from and how they might be addressed. The short version is that Congress has blocked all sorts of serious reforms to an operation that has seen a 33 percent decline in mail volume since 2006.

And here’s another twitter thread that’s worth a look.

 

Or what about this article by Jack Shafer from (probably anti-Trump) Politico.

The USPS really is hurting finanically, and really is worried about delivering ballots on time. It’s legitimate to worry about postal delays botching the vote, if a mass of votes are cast by mail just before Election Day. But don’t extrapolate from news accounts, USPS union protestations and candidate carping… the USPS has sent letters to 46 states expressing its doubts about delivering all the ballots in time to be counted. But, as the Washingtonn Post also mentioned in its story, those letters were in the works before Trump’s new postmaster general took office. …What about those vanishing USPS mail collection boxes? As it turns out, the USPS has been culling the boxes since 2000, when their numbers peaked and 365,000 of them stood sentinel on U.S. streets. Today, their numbers have dwindled to 142,000. Why has the USPS deleted them? Because the volume of first-class has nose-dived.

So what’s actually going on?

As I noted at the beginning of this column, we’re getting scammed. The folks who benefit from the current system want to create a sense of panic so they can get a big bailout for the Postal Service.

The Wall Street Journal (which isn’t anti-Trump, but understands how Washington works) opined accurately on what’s really happening.

Mrs. Pelosi is trying to put on a political show, starring Democrats as the saviors of the post office. She says she wants to pass a bill that “prohibits the Postal Service from implementing any changes to operations or level of service it had in place on January 1.” Also in the mix may be a $25 billion cash infusion. Then Chuck Schumer will demand that the Senate come back to town for the same vote. By the way the letter-carriers union endorsed Joe Biden on the weekend.

My modest contribution to this discussion is to unveil aTenth Theorem of Government.

I’ll close with a prediction that politicians at some point in the future will manufacture a crisis (probably about deficits and debt) in order to impose a value-added tax.

P.S. Here are the nine previous Theorems of Government.

  • The “First Theorem” explains how Washington really operates.
  • The “Second Theorem” explains why it is so important to block the creation of new programs.
  • The “Third Theorem” explains why centralized programs inevitably waste money.
  • The “Fourth Theorem” explains that good policy can be good politics.
  • The “Fifth Theorem” explains how good ideas on paper become bad ideas in reality.
  • The “Sixth Theorem” explains an under-appreciated benefit of a flat tax.
  • The “Seventh Theorem” explains how bigger governments are less competent.
  • The “Eighth Theorem” explains the motives of those who focus on inequality.
  • The “Ninth Theorem of Government” explains how politics often trump principles.

 

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Way back in January of 2017, I predicted for a French TV audience that Donald Trump would be a big spender like George Bush instead of a small-government conservative like Ronald Reagan.

Sadly, I was right.

I crunched the numbers earlier this year and showed that Trump has been a big spender, no matter how the data is sliced.

Perhaps most shocking, he’s even allowed domestic spending to increase faster than it did under Bill Clinton, Jimmy Carter, and Barack Obama.

That’s a terrible track record, especially compared to Reagan’s impressive performance (by the way, these calculations were made before all the coronavirus-related spending, so updated numbers would make Trump look even worse by comparison).

Anyhow, I’m looking at this issue today because of a recent story in the Washington Post.

The Reagan Foundation just told the Trump people to stop using the Gipper’s likeness in their fundraising appeals.

The Ronald Reagan Presidential Foundation and Institute, which runs the 40th president’s library near Los Angeles, has demanded that President Trump and the Republican National Committee (RNC) quit raising campaign money by using Ronald Reagan’s name and likeness. …What came to the foundation’s attention — and compelled officials there to complain — was a fundraising email that went out July 19… The solicitation offered, for a donation of $45 or more, a “limited edition” commemorative set featuring two gold-colored coins, one with an image of Reagan and one with an image of Trump. …Proceeds from the coin sales went to the Trump Make America Great Again Committee, a joint fundraising operation that benefits both the Trump campaign and the RNC. …In the 1990s, both Reagan and his wife Nancy signed legal documents that granted the foundation sole rights to their names, likenesses and images. …the RNC accepted the foundation’s demand regarding the fundraising emails.

It’s unclear why the Reagan Foundation made the request.

For what it’s worth, I hope officials were motivated at least in part by disappointment with Trump’s anti-conservative record on government spending (and also on trade).

Simply stated, Trump is no Reagan.

While I’m a big fan of the Gipper, I don’t pretend he had a perfect track record. But I think it’s correct to say that his goal was to advance liberty by shrinking government, even if there were occasional detours.

For instance, Holman Jenkins noted in his Wall Street Journal column that Reagan always had the right long-run goals even when he made short-run comprises on trade that were unfortunate.

Reagan slapped import quotas on cars, motorcycles, forklifts, memory chips, color TVs, machine tools, textiles, steel, Canadian lumber and mushrooms. There was no market meltdown. Donald Trump hit foreign steel and aluminum, and the Dow Jones Industrial Average fell more than 600 points… The real difference is that Reagan’s protectionist devices were negotiated. They were acts of cartel creation… This was unattractive but it wasn’t a disaster, and Reagan’s protectionism quickly fell away when a global upswing began. …Mr. Trump wants a spectacle with himself at the center. …His confused and misguided ideas about trade are one of his few long and deeply held policy commitments.

And if you need more evidence, look at what Reagan said about trade here, here, and here.

Can you imagine Trump giving such remarks? Or even understanding the underlying principles?

There are also important differences in the populism of Trump and Reagan, as explained by Jonah Goldberg of the American Enterprise Institute.

…there are different kinds of conservative populism. Until recently, right-wing populism manifested itself in the various forms of the tea party, which emphasized limited government and fiscal restraint. That populism…is very different from Trump’s version. …Reagan’s themes and rhetoric were decidedly un-Trumpian. The conservative populist who delivered “A Time for Choosing” used broadly inclusive language, focusing his ire at a centralized government that reduced a nation of aspiring individuals to “the masses.” …Reagan’s populist rhetoric was informed by a moderate, big-hearted temperament, a faith in American exceptionalism… He warned of concentrated power that corrodes self-government.

I’ll close with the observation that Trump has enacted some good policies, especially with regard to taxes and red tape.

The bottom line is that I’m not trying to convince anyone to vote for Trump or to vote against Trump.

Instead, I simply want people to be consistent and principled advocates of economic liberty instead of blind partisans.

As explained in my Ninth Theorem of Government.

In other words, I don’t care if you’re an enthusiastic supporter of Trump. Just don’t let that support lead you to somehow rationalize that wasteful spending and protectionism are somehow good ideas.

And I don’t care if you’re an enthusiastic never-Trumper. Just don’t let that hostility lead you to somehow decide that tax cuts and deregulation are bad ideas.

P.S. In my speeches over the past few years, I’ve run into many people who tell me that Trump must be good because the media hates him the same way they hated Reagan. It’s certainly true that the establishment press has visceral disdain for both of them. I’ll simply point out that media hostility is a necessary but not sufficient condition for determining whether a Republican believes in smaller government.

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I know pro-market people who plan on voting to re-elect Trump because they like his record on taxes or regulation. I also know pro-market people who plan on voting against Trump because they don’t like his record on spending or trade.

I understand their motives. What baffles me, however, are people who have decided – because of their views on Trump – to change their views on policy issues. Which is one of the clever aspects of this amusing video from Ryan Long.

By the way, this is not a new phenomenon.

During the 2001-2008 period, I constantly interacted with people who were against proposals for bigger government when Bill Clinton was in the White House, but then decided to rationalize George Bush’s profligacy and interventionism.

There’s a word for this: Hypocrisy.

This accusation certainly applies to politicians, who face pressure to “be a team player” when a member of their party is in the White House and issuing foolish proposals.

But it also applies to ordinary people. And this Ninth Theorem of Government is dedicated to both groups.

I’ll close by revisiting what I wrote about understanding the motives of pro-market people who are either voting for Trump or against Trump.

That being said, I don’t the pro-Trump voters to suddenly decide that it’s a good idea to squander money or impose trade taxes. I want them to vote for Trump in spite of those bad policies.

And I don’t want the anti-Trump voters to decide that it’s a a good idea to oppose pro-growth tax cuts and deregulation.  I want them to vote against Trump in spite of those good policies.

This analysis also applies to folks who are motivated by other issues (immigration, foreign policy, guns, judges, decorum, etc). Simply stated, put principles first.

P.S. Here are the eight previous Theorems of Government.

  • The “First Theorem” explains how Washington really operates.
  • The “Second Theorem” explains why it is so important to block the creation of new programs.
  • The “Third Theorem” explains why centralized programs inevitably waste money.
  • The “Fourth Theorem” explains that good policy can be good politics.
  • The “Fifth Theorem” explains how good ideas on paper become bad ideas in reality.
  • The “Sixth Theorem” explains an under-appreciated benefit of a flat tax.
  • The “Seventh Theorem” explains how bigger governments are less competent.
  • The “Eighth Theorem” explains the motives of those who focus on inequality.

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In early 2019, I released this video summarizing some of the evidence for free trade.

The bad news is that I must not be very persuasive. Trump continued with protectionist policy.

The good news is that we now have more evidence against that form of government intervention.

But first, I’m going to start with a bit of theory. Here’s a chart from the Council of Foreign Relations showing the relationship between prosperity and trade balances.

And here’s the explanation, courtesy of Benn Steil and Benjamin Della Rocca.

President Trump says that America running a trade deficit means that “jobs and wealth are being given to other countries.” …this statement is logically and historically false. The left-hand figure above shows that the relationship between trade deficits and growth in the United States, going back nearly 30 years, is the opposite. Rising growth tends to increase imports through higher consumption. The imports have not meant that “jobs and wealth are being given to other countries”: they have been a sign of a strong U.S. economy.

This is spot on. As I explained in my video on the trade deficit, people in richer, faster-growing countries can afford to buy more goods and services (regardless of where they are produced) than people in countries with anemic economic performance.

Indeed, this is why (at least in the pre-coronavirus era) America’s trade deficit was expanding.

Now let’s shift to the additional evidence that has accumulated since the video was produced.

Here’s are the key findings from a study by Kyle Handley, Fariha Kamal, and Ryan Monarch, which was just published by the Federal Reserve.

Using 2016 confidential firm-trade linked data, we document the implied incidence and scope of new import tariffs. Firms that eventually faced tariff increases on their imports ac-counted for 84% of all exports and they represent 65% of manufacturing employment. For all affected firms, the implied cost is $900 per worker in new duties. To estimate the effect on U.S. export growth, we construct product-level measures of import tariff exposure of U.S. exports from the underlying firm micro data.More exposed products experienced 2 percentage point lower growth relative to products with no exposure. The decline in exports is equivalent to an ad valorem tariff on U.S. exports of almost 2% for the typical product and almost 4% for products with higher than average exposure.

Here are some results of a recent study by Stephen J. Redding, Mary Amiti, and David Weinstein.

Using data from 2018, a number of studies have found that recent U.S tariffs have been passed on entirely to U.S. importers and consumers. …Using another year of data including significant escalations in the trade war, we find that U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers. We show that the response of import values to the tariffs increases in absolute magnitude over time, consistent with the idea that it takes time for firms to reorganize supply chains.

Here’s a chart from the study showing how Trump basically tripled average trade taxes over the past couple of years.

Next we have a 2019 study authored by Davide Furceri, Swarnali A. Hannan, Jonathan D. Ostry, and Andrew K. Rose.

We estimate impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963‐2014. Tariffs increases are associated with persistent economically and statistically significant declines in domestic output and productivity, as well as higher unemployment and inequality, real exchange rate appreciation and insignificant changes to the trade balance. Output and productivity impacts are magnified when tariffs rise during expansions and when they are imposed by advanced (as opposed to developing) economies; effects are asymmetric, being larger when tariffs go up than when they fall. Results are robust to a large number of perturbations to our methodology, and hold using both macroeconomic and industry‐level data.

These charts from their study paint a damning picture.

The bottom line is that Trump’s trade policies are hurting the U.S. economy (just like China’s protectionist policies are hurting that nation’s economy).

P.S. A great mystery is how some analysts understand that it’s bad to have higher taxes on trade, yet also think it’s perfectly okay to impose even bigger tax increases on work, saving, investment, and entrepreneurship. The folks at the International Monetary Fund are very guilty of this type of fiscal hypocrisy.

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There are plenty of people on the left who write serious and substantive articles about fiscal policy. For instance, I strongly disagree with many of the policy prescriptions from the IMF and the OECD, but those international bureaucracies are reasonably rigorous with data.

Heck, they even use real data when they’re being dishonest.

Some people, though, churn out analysis that is utterly disconnected from reality. I’m even thinking of creating a Fiscal Fantasyland Club to commemorate their fact-deprived writings.

  1. In a column for the Washington Post, Dana Milbank blamed the “disastrous philosophy” of “anti-government conservatism” for leaving the federal government without the resources to fight the coronavirus.
  2. In an article for the Atlantic, George Packer told readers that the federal government screwed up because it has been subjected to “steady defunding” by right-wing ideologues intent on “squeezing it dry.”
  3. Another columnist for the Washington Post, Dan Balz, claims that the botched response to coronavirus was caused by “underinvestment” and “hollowing out” of the federal budget.

The reason we may need a special club (akin to my collection of “Poverty Hucksters“) is that all of these writers are wildly wrong.

Even a cursory look at budget data confirms that the federal government has been getting bigger over time.

Much bigger.

As such, only someone who is completely ignorant or totally dishonest is capable of writing an article based on the notion that there have been reductions in the burden of federal spending.

If I create this club, I know who will be fourth member.

Writing for the Bulwark, Richard North Patterson argues that President Trump’s personal shortcomings are somehow connected to Reagan-type opposition to big government.

He starts with one of my favorite quotes from The Gipper and then tells us that this type of hostility to statism is no longer appropriate or desirable.

In 1986, Ronald Reagan cheerfully gibed: “The nine most terrifying words in the English language are ‘I’m from the government, and I’m here to help.’” Then it seemed amusing. But 34 years later, the convergence of COVID-19 and a racial conflagration makes Reagan’s quip sound myopic. …Only government can ensure the safety of our food and drugs and protect our natural environment. And government can help navigate our racial fissures, and provide the economic and public health interventions indispensable to combating a deadly pandemic.

Given that Washington’s response to the coronavirus has been spectacularly incompetent, well beyond what even libertarians would have predicted, it’s remarkable that Patterson thinks this is a moment in time when people should embrace big government.

And let’s not forget that today’s racial unrest was triggered by government misbehavior, enabled by corrupt deals between local politicians and government employee unions.

But the real problem with Patterson’s rhetoric is that he seems to assume that an argument for some government is the same as an argument for lots of government.

He’s obviously not familiar with the Rahn Curve, which is based on the insight that some government may be good for growth (assuming the outlays are for core public goods) but that lots of government (particularly when spending is for consumption and redistribution) is bad for growth.

To be fair, I understand why Patterson, who is mostly known for being a very successful novelist, isn’t familiar with the academic research on the growth-maximizing size of government.

But since he’s decided to pontificate on these issues, he should feel an obligation to know some basic data.

For instance, he’s a wealthy man and presumably has traveled the world. Hasn’t he noticed that nations with big governments don’t do a better job of providing public goods – even if we use an expansive concept of what government should be doing?

Let’s look at some more of his article.

Patterson not only rejects the notion of smaller government, he seems to embrace bigger government.

What was once a philosophical preference for limited government has degenerated into phobia. “Long before Trump,” GOP strategist Stuart Stevens observes, “the Republican Party adopted as a key article of faith that more government was bad. But somewhere along the way, it became ‘all government is bad.’ Now we are in a crisis that can be solved only by massive government intervention.” …Witnessing so much death and disturbance, one cannot but ponder how poorly Reagan’s casual nostrum has aged. Farhad Manjoo nails it: “The most comforting words I can think of now, amid so much uncertainty, chaos and confusion, are these: ‘I’m from the government, and I’m here to help.’”

There’s a lot of nonsense in those few sentences. Regarding Manjoo’s quote, I’ll simply repeat my earlier observation about how the federal government has hindered rather than helped the fight against the coronavirus.

The quote from Stuart Stevens is even stranger, at least the the latter part, because it is so completely contrary to real-world data.

While it is true that Reagan briefly reoriented Republicans and did a good job of controlling spending while he was in office, every other Republican in recent history has been a big spender.

They’ve even increased domestic spending at a faster rate than Democratic presidents.

Yet Stevens wants people to believe that’s the track record of a party that thinks “all government is bad.”

I also want to debunk the notion that there’s been a “decades-long gutting of government,” as asserted in the subtitle of Patterson’s article.

Here’s a chart that I shared back in April, which shows that federal spending has tripled since 1980 – and that’s after adjusting for inflation.

If you read Patterson’s entire article, you’ll find that he mostly focuses on President Trump’s chaotic management of the executive branch.

Since I’ve gone on TV and referred to Trump as being akin to the crazy uncle you deal with during family holidays, I’m certainly not going to argue with his criticisms of the White House’s governing style.

But surely it should be possible to criticize the president without relying on make-believe budget analysis.

P.S. I wonder if Patterson and other members of the Fiscal Fantasyland Club have been tricked into thinking that there have been budget cuts.

P.P.S. If Patterson decides to learn and use real budget data, I hope he’ll join me in criticizing Trump for being a big spender.

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Notwithstanding dalliances in other fields, I’m a policy wonk.

But I will pontificate (often incorrectly) on politics when asked, which is what happened in this interview about the electoral impact of the coronavirus.

My basic point is that Trump is much better than the average Republican about “controlling the narrative.”

In other words, he doesn’t allow the media to frame issues in a way that is adverse to his interests.

Given Trump’s Jekyll-Hyde approach to economic policy, I have mixed feelings about his Jedi-like ability.

But I will point out why narratives are so important in public policy.

Since I’ve shifted to my comfort zone of public policy, I’ll also say something about trade.

One of the big risks from the coronavirus is that it will weaken global trade. Which led me to mention in the interview that hopefully Trump might learn from this growing crisis that expanded trade is good for prosperity.

Though I admit I’m not very optimistic given his mercantilist perspective.

P.S. Textbook discussions of “robber barons” and “sweatshops” are other examples of how bad narratives lead to distorted history.

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Early last year, I shared a video explaining that trade deficits generally don’t matter. I even suggested trade deficits might be a sign of economic strength because foreigners who earned dollars were anxious to invest them in the American economy.

I’m recycling this video to make a point about trade and the economy for both Trump supporters and Trump critics.

For Trump supporters, I want them to understand that the trade deficit has increased under his policies. The data from the latest Commerce Department report show that the yearly trade deficit has increased from about $500 billion at the end of the Obama years to a bit over $600 billion during the Trump years.

And the reason I’m making this point is that I want Trump supporters to realize that they shouldn’t be upset about trade balances. Indeed, they should be happy because there’s a strong argument that the trade deficit is increasing in large part because Trump’s pro-growth tax reform and regulatory reform and making America more attractive for foreign investors.

For Trump critics, I want them to understand the same point, though from a different perspective. Many of them have been (correctly) critical of Trump’s protectionism. And they’ve been happy to point out that his taxes on foreign goods haven’t reduced the trade deficit.

But I would like them to contemplate why the economy has continued to grow. Hopefully, they will realize that pro-market policies in other areas are offsetting the damage of protectionism and therefore be more supportive of capitalism.

The Wall Street Journal opined on this topic last year.

President Trump can take a bow that his tax reform and deregulation are working as intended. …The trade deficit grew… This is not bad economic news. Imports grew faster than exports as the U.S. economy accelerated and much of the world slowed. The dollar grew stronger as capital flowed into the U.S., and the trade deficit grew to offset the larger capital inflows as it must by definition under the national income accounts. …a larger trade deficit is a benign byproduct of a healthier American economy. Supply-side policies revived animal spirits and gave the economy a second wind. …The best way to respond to a trade deficit is to ignore it.

From a left-of-center perspective, Fareed Zakaria made the same point in a recent column for the Washington Post.

Trump campaigned relentlessly on the notion that America’s economy was being ruined by large trade deficits. …He promised on the campaign trail in June 2016, “You will see a drop like you’ve never seen before.”In reality, the trade deficit has risen substantially under Trump. …when the United States has grown robustly, its trade deficit has tended to rise. If you want to achieve a sharp decline in the trade deficit, it’s easy — just trigger a recession. …while the United States has a deficit in manufactured goods with the rest of the world, it runs a huge surplus in services (banking, insurance, consulting, etc.). …The United States is also the world’s favorite destination to invest capital, by a large margin. As Martin points out, when you look at this entire picture, “the trade deficit should be something to brag about rather than denounce.” …Trump’s trade policy has been an enormously costly exercise, forcing Americans to pay tens of billions in taxes on imported goods, then using tens of billions of dollars in taxpayer funds to compensate farmers for lost income (because of retaliatory tariffs)… All to solve a problem that isn’t really a problem.

Veronique de Rugy of the Mercatus Center, writing for Reason, summarizes the issue.

President Donald Trump hates the trade deficit. …If elected, he promised, he would “end our chronic trade deficits.” …free traders…explained, a country’s trade balance is determined overwhelmingly by factors such as the U.S dollar serving as a reserve currency, the ratio of savings to investment opportunities at home and abroad, and the relative attractiveness of that country’s investment climate. As long as the United States is growing and remains an attractive place to invest, we Americans will continue to run trade deficits with the rest of the world. …They want these dollars, in part, to buy American exports. …More important, and often overlooked: Foreigners want dollars also to invest in America’s powerful economy. …the current-account deficit is a mirror image of the capital-account surplus. This is why Mark Perry of the American Enterprise Institute describes imports as “job-generating foreign investment surpluses for a better America.” It is thus no surprise that as the American economy grew, the trade deficit also grew.

I’ll close with a chart that’s in the video because it reinforces the three columns cited above.

As you can see, the link between the trade deficit and an investment surplus isn’t just a theoretical construct. It’s an accounting identity.

The bottom line is that people on both sides of the political debate should ignore the trade deficit and instead focus on the tried-and-true recipe for generating prosperity.

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I pointed out yesterday that Donald Trump has increased domestic spending at a faster rate than Barack Obama, Bill Clinton, or Jimmy Carter.

The day before, I castigated him for proposing a budget that expands the burden of government spending by $2 trillion over the next decade.

And two days before that, I explained that he hasn’t really changed the trend line on jobs.

So it’s safe to say I don’t go out of my way to say nice things.

But I’m also very fair. I don’t hesitate to praise politicians whenever they do good things, or to point out evidence that their policies are having a desirable effect.

And here’s a tweet that suggest Trump has made a positive difference.

This is an amazing shift.

Especially since Trump hasn’t actually fixed the problems that lead some successful people to expatriate.

But he has moved policy in the right direction is some of those areas thanks to the 2017 tax legislation.

His other achievement, which is probably even more important, is that he’s not Hillary Clinton. In other words, we’re not getting the bad tax policies that might have occurred in a Clinton Administration.

So it’s understandable that there’s been a big drop in the number of expatriates. The type of people who might move (the “canaries in the coal mine“) now think things are getting better rather than worse.

By the way, we’re talking about small numbers of people. But they’re often exactly the type of people – entrepreneurs, inventors, and innovators – that help drive growth.

P.S. I’ll add today’s column to my collection of noteworthy tweets.

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Trump’s new budget was released yesterday and almost every media outlet wrote about supposed multi-trillion dollar spending cuts when, in reality, the President’s budget actually calls for nearly $2 trillion of additional spending over the next 10 years.

The bottom line is that Trump is more akin to a big-government Republican rather than a Reagan-style conservative.

Today, let’s take a look at Table 3.2 of the Historical Tables of the Budget to assess how Trump’s record on spending compares to other modern presidents.

I’ve done this exercise in the past, starting in 2012 and most recently in 2017, but this is the first year we have enough data to include Trump’s performance.

And if we simply look at overall spending numbers (adjusted for inflation, of course), we get the shocking result that Obama increased spending at the slowest rate.

This surprising outcome is due in part to factors such as falling interest rates, a slowdown in military expenditures, and the fiscal impact of the 2010 elections (in other words, gridlock can be beneficial).

Trump, meanwhile, is near the bottom of the list (though not as bad as George W. Bush and LBJ).

What happens, though, if we remove interest payments from the data? After all, those outlays truly are uncontrollable (barring a default) and they mostly reflect spending decisions of prior administrations.

So if we want to judge a president’s fiscal policy, we should look at “primary spending,” which is the term used by budget geeks when looking at non-interest spending.

This measure doesn’t radically alter the results, but some presidents wind up looking better and others fall.

Another way of looking at the numbers is to remove the fiscal impact of bailouts, such as TARP (and also the savings & loan bailouts of the late 1980s).

The reason for this alteration is that the bailouts cause a big spike in spending when they occur, and then cause a drop afterwards because repayments actually are considered “negative spending,” as are the premiums that banks pay each year (I’m not kidding).

So presidents who are in office when the bailouts occur wind up looking worse, even though their policies may not have contributed to the problem. And the presidents who are in office when the repayments occur (remember, those count as negative spending) wind up looking better than they really are.

Here are the adjusted rankings (calculated by subtracting rows 46, 50, and 51 of Table 3.2). As you can see, Obama takes a bit of a tumble and Reagan is now the most fiscally prudent president.

Last but not least, now let’s also remove defense spending so we can see which presidents did the best (and the worst) when it comes to social welfare spending.

This is the most important category for those of us who believe the federal government should get out of the business of income redistribution and social insurance.

Reagan easily tops the list, limiting outlays to 0.5 percent annual growth. The other thing that’s remarkable is that every other Republican was worse than Bill Clinton, Jimmy Carter, and Barack Obama.

For what it’s worth, Trump is the best of the non-Reagan Republicans, though that is damning with very faint praise.

The first President Bush was awful on spending, and Nixon was catastrophically terrible.

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I would prefer not to write about President Trump’s new budget, largely because I know it’s not a serious proposal.

Even before he was elected, I pointed out that Trump was a big-government Republican who had no intention of dealing with serious fiscal issues such as the rising burden of entitlement spending.

So I wasn’t surprised that he capitulated to swamp-friendly budget deals in 2017, 2018, and 2019. And I’m depressingly confident that the same thing will happen this year.

That being said, I want to comment on how the media is covering his latest budget.

Take a look at some of the headlines that are dominating the news this morning.

From Reuters.

From New York magazine.

From the Washington Times.

From NBC.

From the Associated Press.

From Bloomberg.

From International Business Times.

From Fox.

From the Wall Street Journal.

All of these headlines make is seem like Trump is proposing a Reagan-style budget with lots of cuts, especially with regards to domestic programs.

All of that would be great news…if it was true.

In reality, here’s what Trump is projecting for total spending over the next 10 years.

Can you find the spending cuts?

And here’s what’s happening with domestic spending (mandatory outlays plus domestic discretionary) according to Trump’s budget.

Can you find the spending cuts?

Last but not least, here’s Trump’s plan for domestic discretionary spending.

Can you find the spending cuts?

So why is there such a big disconnect in the media? Why are there headlines about cutting and slashing when government is growing by every possible measure?

For the simple reason that the budget process in Washington is pervasively dishonest, as I’ve explained in interviews with John Stossel and Judge Napolitano. Here are the three things you need to know.

  1. The politicians created a system that automatically assumes big increases in annual spending, called a baseline.
  2. When there’s a proposal to have spending grow slower than the baseline, the gap between the proposal and the baseline is called a cut.
  3. It’s like being on a diet and claiming progress because you’re gaining two pounds each month rather than five pounds.

Defenders of this system argue that programs should get built-in increases because of things such as inflation, or because of more old people, which leads to more spending for programs such as Social Security and Medicare.

It’s certainly reasonable for them to argue that budgets should increase for these reasons.

But they should be honest. Be forthright and assert that “Spending should climb X percent because…”

Needless to say, that won’t happen. The pro-spending politicians and interest groups like the current approach because it allows them to scare voters by warning about “savage” and “draconian” spending cuts.

Remember how Obama said the sequester would wreak havoc because of massive cuts? Except there weren’t any cuts, massive or otherwise. As Thomas Sowell pointed out, Obama was trying to deceive voters.

P.S. The British also use dishonest budgeting.

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There’s endless “spin” in over-politicized and self-serving Washington, with Democrats and Republicans both trying to convince people why any particular bit of economic data is either wonderful news or horrible news.

Since I care about policy rather than politics, I like to think I’m largely immune from this tendency. I criticize either Republicans or Democrats when they do something wrong, and I also offer praise when either Republicans or Democrats do something right.

That applies to Trump, of course.

For instance, the Department of Labor just released new numbers on the job market and Trump loyalists are bragging that this is additional confirmation that the president has steered the economy into glorious prosperity after the supposed wretched misery of the Obama years.

Is that true?

Well, here’s a chart showing total employment in the United States, taken directly from the Bureau of Labor Statistics. We see that jobs have been increasing, but can anybody identify a change in the trend line when Trump took office in January 2017?

For what it’s worth, the average monthly increase in employment has actually been smaller under Trump than it was under Obama.

Though Brian Riedl of the Manhattan Institute correctly observes that it’s harder to get more jobs when the unemployment rate is low.

Now that we’ve looked at total employment, let’s examine the BLS numbers for the unemployment rate.

Yes, we see better numbers during the Trump years, but we’ve been getting better numbers ever since 2010.

Can anyone look at this data and make a compelling case that there was some big change starting in 2017?

Next we have the BLS chart showing the employment-population ratio, which measures the share of the adult population which is actually employed (a key factor since economic output is a function of the quantity and quality of both labor and capital).

Notice, once again, that there’s no obvious change in the trend line when Trump took over from Obama.

It’s not good news, by the way, that the employment-population ratio is still below where it was before the 2008 crisis.

Though it’s worth noting that the employment-population numbers look much better if they’re adjusted for demographic change.

But adjusting the numbers for demographic change doesn’t have any impact on the point I’m making today. Notice that there hasn’t been any obvious change in the trend since Trump got to the White House.

So why do I keep making the point that the trend hasn’t changed?

Because I want people to understand that policy matters, not partisan affiliation. And the bottom line is that the trend line hasn’t noticeably changed because Trump hasn’t noticeably changed the overall level of economic freedom compared to Obama.

Yes, Trump has moved policy in the right direction on some issues (taxes and regulation), but he’s also moved policy in the wrong direction on other issues (trade and spending). Simply stated, his bad policies are offsetting his good policies.

Obama moved policy in the wrong direction, of course, but that was largely during his first two years. There was a policy stalemate his final six years.

And in terms of overall economic liberty, the post-2010 policy stalemate under Obama produced similar scores to the zig-zag policy we’re getting under Trump. So we shouldn’t be surprised that the trend lines are so similar.

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